The Central Government has clarified that renewable energy devices such as solar panels, biogas plants, and windmill components are subject to 12% Goods and Services Tax (GST), not 5% as widely believed. The clarification came in response to a question raised in the Rajya Sabha by MP Shri Yerram Venkata Subba Reddy.

In a written reply, Minister of State for Finance Shri Pankaj Chaudhary stated that GST rates are determined based on the recommendations of the GST Council, a constitutional body comprising representatives from both the Union and State governments. He confirmed that the GST rate on specified renewable energy devices currently stands at 12%.

The Minister also addressed a separate query regarding electric vehicles (EVs), confirming that EVs attract a concessional GST rate of 5%. Additionally, as per a notification issued by the Ministry of Road Transport and Highways (MoRTH) in May 2022, electric vehicles are entitled to a 15% lower third-party insurance premium compared to conventional fuel-based vehicles.

The clarification comes amid growing focus on sustainable energy and cleaner mobility solutions, as India ramps up efforts to transition to a low-carbon economy.

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