Tax Benefits Solar Power India

In india any investments in solar power plants can benefit from an important tax incentive the accelerated depreciation ad benefit.

Tax benefits solar power india.

This in return allows the user to claim tax benefits on the value depreciated in a given year. But remember depreciation is 20 on plant and machinery for any business. 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. 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.

So the actual project cost of solar power plant for an ad client is rs5 15cr. Yet despite the increase of available solar energy over the past 10 years solar still only accounts for 1 8 of total energy used in the u s. 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. Accelerated depreciation up to 80 in the first year subsequently 20 in the second year.

If you are a profit making company you need to pay corporate tax 35 on your book profits. Scenario uptil 31 st. Solar power also trails hydropower biomass and. 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.

It works as follows. 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. While calculating book profits you add depreciation to your expenses and. 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.

Income tax for solar power generation units is 80 and it is an accelerated rate of depreciation. The normal depreciation rate for any general plant and machinery is 15. Ad benefit in year one is rs1 85 cr. In the case of solar power generation in order to incentivize the entrepreneurs.