Rajasthan Power Utilities Seek Tariff Cut After GST Reduction On Solar Projects

Three state-run power distribution companies in Rajasthan have approached the state electricity regulator seeking a reduction in solar power tariffs under the PM-KUSUM scheme, citing a recent cut in taxes on renewable energy equipment.

Jaipur Vidyut Vitran Nigam Ltd, Ajmer Vidyut Vitran Nigam Ltd and Jodhpur Vidyut Vitran Nigam Ltd have jointly filed a petition before the Rajasthan Electricity Regulatory Commission (RERC), arguing that the reduction in the Goods and Services Tax (GST) on solar equipment warrants a downward revision of approved tariffs under existing power purchase agreements.

GST Cut Adjustment 

The utilities have asked the regulator to consider the GST cut—from 12% to 5% on key renewable energy devices and components—as a “change in law” event. They said the lower tax rate has reduced project capital costs and that the benefit should be passed on through lower levelised tariffs.

The proposed revision would apply to projects awarded under Component A and Component C of the PM-KUSUM scheme. Component A covers decentralised, ground-mounted, grid-connected solar power plants, while Component C involves feeder-level solarisation of agricultural pumps.

Two Methodologies

In their filing, the discoms outlined two possible mechanisms for tariff adjustment. Under an actuals-based approach, the revision would be calculated using GST invoices submitted by project developers. Where invoices are not provided, the utilities have sought approval to apply a default computation based on their internal impact assessment, which assumes an effective GST rate reduction on capital costs to about 8.9% from roughly 13.8%.

The utilities said any recoverable amount could be adjusted against developers’ first monthly energy bills, with an alternative annuity-based recovery model proposed if the regulator considers it more appropriate.

RERC has invited comments from stakeholders on the draft petition before deciding on the matter. Public submissions have been sought until Jan. 12, 2026, according to the filing.