The Goods and Services Tax (GST) Council, the Centre and States’ joint decision-making body, has announced a significant change in energy tax rates. Starting September 22, 2025, the GST on renewable energy components such as solar panels, cookers, lamps, windmills, biogas plants, waste-to-energy systems, and tidal or wave energy devices will be cut from 12% to 5%.
In contrast, the GST on coal and lignite will rise dramatically, from 5% to 18%. Officials said the decision is intended to make renewable energy more competitive, lower project costs, and reduce reliance on fossil fuels. The Central Board of Indirect Taxes and Customs described the revision as a step towards promoting renewable energy and reducing Chinese solar module imports.
Industry executives have praised the decision as a historic development.
India recently crossed 100GW of installed solar capacity, establishing itself as the world’s fourth-largest market. Domestic solar production has also increased from 2.3GW in 2014 to over 100GW by 2025. The lower GST is projected to encourage investment, enhance local supply chains, and expedite India’s renewable energy objective of 500GW by 2030.
