CERC lets discoms seek tariff relief following GST rate cut on RE projects

GST reduction from 12% to 5% on RE inputs qualifies as change in law; benefits must be passed through to buyers

The Central Electricity Regulatory Commission (CERC) has allowed power distribution companies (discoms) to seek tariff relief on electricity supplied from renewable energy (RE) projects on account of the Goods and Services Tax (GST) rate cut announced in September. The cut in the GST rate from 12 per cent to 5 per cent will be considered a “change in law” event, the regulator said in a suo motu order.

 

“We direct that in instances where procurement, commissioning, Commercial Operation Declaration (COD), or Scheduled Commercial Operation Declaration (SCOD) occurs on or after 22 September 2025, but the bid submission date precedes 22 September, all the RE generating stations and the concerned discoms are duty bound to consider the impact of this reduction in GST rates prior to approaching the Commission for determination of tariff under the provisions of Change in Law,” CERC said.

 

The change in the GST rate with effect from 22 September has led to a change in the cost of inputs required for renewable energy generation and has affected the procurement of renewable energy devices and components.

 

“Any reduction in GST rate or the benefit of input tax credit shall be passed on to the recipient by way of commensurate reduction in prices as an anti-profiteering measure. We observe that a decrease in the GST rate from 12 per cent to 5 per cent has the effect of saving in the project’s net cost,” the Commission said.

 

The regulator has directed RE generating stations to provide relevant documents to discoms to enable the contracting parties of power purchase agreements to carry out reconciliation on account of the reduction in expenditure.