Commercial & Industrial

The MNRE (Ministry of New and Renewable Energy – Central Government) has set a target of installing 227 Gigawatts (22,70,00,000 kilowatts) of renewable energy by 31 March 2022. To accomplish this, they are encouraging solar in a variety of ways, one of which is by giving commercial clients with accelerated depreciation tax benefits. The government of India is also promoting solar energy in the corporate and private sector through tax relief by allowing them to claim a higher rate of depreciation, more commonly referred to as accelerated depreciation / AD Benefit, under section 32 of the Income Tax Act. Solar power is being promoted in corporates and private sector by Govt of India through Tax relief by allowing them to avail higher rate of depreciation more often termed as accelerated depreciation / AD Benefit, under section 32 of Income Tax act. The normal depreciation rate for any general plant and machinery is 15%. For commercial and industrial electricity consumers, the Government of India's accelerated depreciation tax benefits on solar energy installations are extremely advantageous and help make solar energy a viable and sustainable option for commercial customers. To encourage the use of solar energy in commercial and industrial sectors, the Indian government grants accelerated depreciation on solar power plant fixed assets. At the moment, the maximum rate of acceleration that may be claimed in a year is 40%. Comparatively, the normal rate of depreciation for general plant and machinery is 15%. The benefit of accelerated depreciation enables commercial and industrial consumers of solar energy in India to discount their investment in a solar power plant at a rate significantly higher than that of other fixed assets. This allows the user to claim tax benefits on the value of the asset depreciated during the year.