Imposition of taxes on renewable energy products is contradictory in effect to Government subsidies.
Till 2016, in Karnataka, Renewable Energy devices and spare parts attracted a Value Added Tax (VAT) of 5.5%. After engaging persistently with key decision makers over a 3 year period, SELCO Foundation saw some results. In the State Budget for FY 2015-16, the Government of Karnataka announced VAT exemption on certain solar panels and invertors. Other States have also made provision for VAT exemptions on solar energy devices. As the government moves into the Goods and Services Tax (GST) regime in 2017, the goal continues to be to ensure that end users moving to renewable energy are not burdened with the additional cost of taxation on clean energy products.