There are a lot of question on how to avail subsidy on solar energy. In this blog I will try and answer as many as I can.
Q: What is solar subsidy and who gives subsidy?
MNRE (Ministry of New and Renewable Energy - Central Government) is a nodal Ministry of Government of India that works for all matters relating to new and renewable energy. One of the schemes run by this ministry is to achieve a capacity of 40,000 MW from Rooftop Solar (RTS) Projects by the year 2022.
In order to fulfill this target the Ministry is providing Central Financial Assistance (CFA) or subsidy to Residential sector. The subsidy is applicable for rooftop grid connected system at the below mentioned slabs.
· CFA @ 40% for capacity up to 3 kWp
· CFA @ 20% for capacity beyond 3 kWp and up to 10 kWp
· CFA @ 20% for GHS/RWA capacity up to 500 kWp (limited to 10 kWp per house and total upto 500 kWp)
Q: Is subsidy available only on rooftop solar installation?
No, solar subsidy is also available on solar water pumping system also. There is subsidy to the tune of 20% to 90% subsidy on benchmark capital cost is available for all consumers.
· 90% On Solar Water Pumping System for farmers only.
· 70% For 3 hill states i.e. Himachal Pradesh, Uttarakhand & Jammu-Kashmir only.
· 30% or all states of India.
Q: Who is eligible for subsidy?
Following consumers are able to get the govt. subsidy:
· Domestic: All residential home owners are eligible to get govt. subsidy.
· Social Sector: All the registered societies, multi-store apartments, cooperative group housing societies are eligible for subsidy on solar system.
· Institutional: All schools, colleges, institutes are eligible for subsidy.
· Non-Profit Organizations: All the non-profit organizations including old age homes and orphanage etc. are eligible.
Subsidy is not available to commercial establishments and factories.
Q: What are the conditions for getting subsidy?
Subsidy is only available on domestic manufactured (Made in India) modules and Solar cells. The CFA (subsidy) shall be on % of benchmark cost of MNRE for the state/ UT or lowest of the costs discovered in the tenders for that state/ UT in that year, whichever is lower.
Q: How to avail the subsidy?
The scheme is to be implemented through Power Distributing companies (DISCOMs), therefore, the residential consumer who wishes to seek CFA has to approach the DISCOMs operating in his area for installation of rooftop solar plant and get the CFA (subsidy).
Q: Who should you connect?
Power Distributing companies (DISCOMs) operating in his area for installation of rooftop solar plant and get the CFA. One can approach either the portal of the DISCOM, if available, or visit the local office of the DISCOM in his area.
Q: What is the process to get subsidy?
Following are the steps required for availing the subsidy:
1 First the applicant needs to submit a project report with technical and financial details, operations and maintenance plan along with system monitoring and reporting details to MNRE. The details will be submitted through district head of your state nodal agency
2 Then MNRE evaluates your project on technical and financial points.
3 After your project is approved by MNRE, open tenders are invited by your state nodal agency and a channel partner will be selected from open bidding process.
4 Channel partner completes the installation process.
5 SNA inspects your installation to ensure that only MNRE approved components are installed.
6 Subsidy amount is released to channel partner directly from MNRE.
It should be noted that you will be responsible for payment of 70% of the system cost. You can however, choose to finance your solar plant and your bank can finance 70% of the system cost.
Q: What about commercial and industrial consumers? Are there any benefits for them?
Yes, commercial and industrial consumers can get the benefit of Accelerated Depreciation Benefit, benefit by the central government, as per section 32 of the Income Tax Act, 1961. Companies can use this to substantially reduce tax burden in the first few years of the project up to 100% of the project cost (80% accelerated depreciation and 20% additional depreciation).
Under section 80-IA of the Income Tax Act, 1961 the central government provides a 10-year tax holiday, in which the beneficiary has the freedom to choose a 10-year continuous period in the first fifteen years of the project life to avail the tax benefit. The projects are taxed by using the Minimum Alternate Tax (MAT) rate, which is significantly lower than the corporate tax rate.
Apart for above tax exemptions the central government has mandated concessions and exemptions on specific materials imported for manufacture of solar power generation products as well as for use in solar power generation projects.
Q: How much area is required for a 1 kW rooftop Solar PV system?
A 1 kW rooftop system generally requires 12 sq. meters (130 square feet) of flat, shadow-free area (preferably south-facing). Actual sizing, however, depends also on local factors of solar radiation and weather conditions and shape of the roof.
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