Tax Benefits Solar Power India

Solar power is being promoted in corporates and private sector by govt of india through tax relief by allowing them to avail higher rate of depreciation more often termed as accelerated depreciation ad benefit under section 32 of income tax act.

Tax benefits solar power india.

Ad benefit in year one is rs1 85 cr. Commercial private and industrial customers can leverage accelerated depreciation benefit solar power generation projects have the option of profiting from accelerated depreciation benefit by the central government as per section 32 of the income tax act 1961. Scenario uptil 31 st. Companies can use this to substantially reduce tax burden in the first few years of the.

It works as follows. The accelerated depreciation benefit allows the commercial and industrial users of solar power in india to depreciate their investment in a solar power plant at a much higher rate than general fixed assets. The installed capacity of solar rooftop augmented from 117 mw to 1250 mw from the period between 2013 to 2016. Tax liability for solar power business in india india with its initiates in the field of.

So the actual project cost of solar power plant for an ad client is rs5 15cr. Note that india has set the target to set up 100 gw of solar power generation capacity by 2022 1giga watt is 1 000 mega watt. The way forward surely is to rationalise and extend the tax deduction on offer rs 1 5 lakh to also include solar roof top power systems. Accelerated depreciation up to 80 in the first year subsequently 20 in the second year.

Accelerated depreciation tax benefit. But remember depreciation is 20 on plant and machinery for any business. In india any investments in solar power plants can benefit from an important tax incentive the accelerated depreciation ad benefit. Income tax for solar power generation units is 80 and it is an accelerated rate of depreciation.

When a business enterprise installs a solar power plant on its roof it gets a tax break what in industry parlance is known as accelerated depreciation. In the case of solar power generation in order to incentivize the entrepreneurs. To this end federal and state governments introduced a number of tax and financial incentives to make india s nascent solar and wind sectors appealing for investors. Taking this immense growth into consideration the ministry of new and renewable energy through its national solar mission of india has set a target of 40 gw power through rooftop solar by 2022.

While calculating book profits you add depreciation to your expenses and. If you are a profit making company you need to pay corporate tax 35 on your book profits.