RERC Has Created A Landmark Regulatory Precedent Of “Symmetry” To Protect Consumers’ Interest By Transfer Of Tax Benefits On Imported Equipment To Distribution Companies- Power Sector News.
The Regulatory Matrix: At a Glance
| Regulatory Parameter | Operational Details & Impact |
| Issuing Authority | Rajasthan Electricity Regulatory Commission (RERC) |
| Order Date | June 3, 2026 |
| Core Subject | Pass-through of financial gains from lower Goods and Services Tax (GST) rates on renewable equipment. |
| Central Event | Reduction of GST on specified green energy components from 12% to 5% effective September 22, 2025. |
| Legal Basis | Classification of tax rate modification as a “Change in Law” event. |
| Primary Beneficiaries | State Power Distribution Companies (Discoms) and ultimately end-use electricity consumers. |
In a move aimed at arresting slide in value of the Indian currency and to check massive flight of capital into overseas markets, Government of India today announced a complete tax holiday to foreign investors on the country’s sovereign debt. This waiver would be effective from April 1, 20.
Effective April 1, 20 The Principle of Regulatory Symmetry
RERC has intervened in the existing Power Purchase Agreements (PPA) of Developers for solar and wind power. The word “Change in Law” has been specifically defined in the RERC regulation. The huge hike in GST rate of solar and wind equipment in October 2021 was allowed to be charged in the tariff to protect the developer’s margin. Similarly, a decrease in tax rate needs to be passed on to consumer in terms of reduced tariff to protect their interest.
The nature of a regulatory event does not change whether rates are going up or coming down. While an increase in tax on the developer’s cost of equipment was allowed to be passed on in tariffs by increasing returns, a decrease in tax would also have to be passed on in decreasing returns. This is to protect the consumers’ pocket.
Applicability and Eligible Projects
To streamline execution and prevent overlapping claims, the Commission defined precise parameters for which green energy projects qualify for the pass-through:
| Category | Eligibility Criteria & Scope |
| Bidding Benchmark | Power projects where competitive bidding was concluded and bids were submitted prior to September 22, 2025. |
| Execution Window | Capital equipment invoices raised, or procurement payments executed, on or after September 22, 2025. |
| Covered Equipment | Solar PV modules, photovoltaic cells, wind turbines, biogas plants, and waste-to-energy conversion systems. |
Audit & Compliance Mandate
To ensure absolute transparency and prevent arbitrary or inflated benefit calculations, the RERC has placed a stringent verification mechanism on developers.
- Granular Submission: Developers must present project-by-project documentation detailing exact procurement dates, invoice values, and actual tax savings achieved.
- Third-Party Attestation: All financial submissions and clawback calculations must be certified by a Chartered Accountant or the statutory auditor of the developer before Discoms process the adjusted tariff payments.
Broader Alignment: This directive aligns Rajasthan with the Central Electricity Regulatory Commission’s (CERC) suo motu order of November 2025, significantly reducing the scope for protracted litigation and setting a clear roadmap for uniform pan-India implementation of green tax rollbacks.
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