Accelerated depreciation is a key factor driving investments in solar power adoption in India. It provides commercial and industrial consumers with quicker depreciation on solar power plant investments compared to traditional plants and machinery. By leveraging accelerated depreciation benefits in solar projects, investors can reduce current taxes. Reinvesting the tax savings in future investments supports long-term financial growth of your business.
Here are the key points how accelerated depreciation benefits commercial and industrial buyers of solar power plants in India:
What it is: Accelerated depreciation is a tax benefit that allows businesses to deduct a higher percentage of the cost of a solar power plant in the early years of its operation.
Standard vs. Accelerated Rates:
Standard depreciation for plant and machinery in India: 15%
Accelerated depreciation for solar power assets: 40% (with an additional 20% possible under certain conditions)
Benefits:
Reduces taxable income and lowers tax liability in the initial years.
Frees up cash flow for reinvestment in the project.
Encourages businesses to adopt solar power by making it more financially viable.
How it Works:
Section 32 of the Income-tax Act allows for accelerated depreciation on solar assets.
Businesses can claim a 40% depreciation on the cost of the solar plant in the first year, and potentially an additional 20%.
This reduces the taxable income in the initial years, leading to lower tax payments.
Overall Impact:
Accelerated depreciation makes solar power a more attractive option for businesses by reducing the upfront financial burden.
This policy helps India achieve its ambitious renewable energy targets.
As the world becomes serious about carbon neutrality and transitioning to a green energy economy, solar power plants have seen a surge in finanicing and investment over the past decade. This wave of 'Green Investments' is being driven by such government policies that benefit all adopters of solar power generation on their premises. Apart from the tax incentives available the cost of generating solar power is over 70% cheaper compared to current tariffs' for commercial consumers. This makes it a worthy investment worth considering.
We design, supply and maintain grid connected solar power plants across Uttarakhand. Our systems come with a 5 years comprehensive warranty, 10 years on the inverter and a 25 yr performance warranty on the solar pv panels. Download our commercial pricelist which shows the capacity wise tax benefits below:
The maximum capacity allowed for installing a system on your premises is determined by the sanctioned load of your electricity connection provided by Uttarakhand Power Corporation Limited (UPCL). Our range of plants varies from 3KW to 200KW, offering significant energy cost savings ranging from Rs. 39,000 to Rs. 26.4 lakhs annually.
Solar power plants for commercial use provide an impressive annual return on investment exceeding 30%, leading to a payback period of just three years. Given the current commercial power tariffs ranging from Rs. 7 to Rs. 8.50 per unit (kWh), the significant cost advantage of solar power is clear, with generation costs as low as Rs. 1.80 per unit. This results in solar power being around 80% more cost-effective than grid power. An important advantage of investing in a solar power plant is the protection it offers against escalating electricity prices, ensuring that your savings grow annually as prices increase in the future.
Please contact us on +91 89540 23000 to know more.
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