Renewable energy developers have urged the Central Government to reduce the Goods and Services Tax (GST) on standalone utility-scale and containerised Battery Energy Storage Systems (BESS) from the current 18% to 5%, aligning it with the concessional GST rate applicable to key renewable energy equipment such as solar modules.
The National Solar Energy Federation of India (NSEFI) has submitted a formal representation to the Ministry of New and Renewable Energy (MNRE), highlighting that the higher tax burden is increasing project costs and slowing the deployment of battery energy storage infrastructure across the country.
Industry Seeks Tax Parity
According to the industry body, battery energy storage systems are now an essential component of India’s renewable energy ecosystem, enabling reliable integration of intermittent solar and wind power into the electricity grid.
However, while major renewable energy equipment attracts a 5% GST, standalone BESS continues to be taxed at 18%, creating a cost disadvantage for developers.
Developers argue that bringing GST on BESS down to 5% would establish tax parity across renewable energy technologies and make storage projects more financially viable.
Boost for Energy Storage Deployment
Battery Energy Storage Systems are increasingly being deployed to:
- Improve grid stability
- Store excess renewable energy
- Supply electricity during peak demand
- Support round-the-clock renewable power
- Enhance energy security
The industry believes lower taxation would accelerate investments in storage infrastructure, which is critical for achieving India’s renewable energy and decarbonisation targets.
Supporting India’s Clean Energy Transition
As India rapidly expands solar and wind capacity, large-scale battery storage is expected to play a vital role in balancing electricity supply and demand.
Developers have stated that reducing GST would lower overall project costs, improve investment returns and encourage faster adoption of standalone storage projects, supporting the country’s long-term clean energy ambitions.
Author
About the Author
