Impact of Levying Electricity Duty on Solar in Maharashtra

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In a notification released by the Industries, Labour and Energy Department, a tax of INR 1.2/ unit would be levied as Electricity Duty for units produced by Solar for self-use.

The release very clearly clarifies the ED that would be levied on electricity produced from Solar (in our case, produced and consumed at source) which amounts to INR 1.2 per unit. This has so far been a grey area which has now been clarified by the Government (refer). Levying this tax does not seem to benefit any of those consuming the electricity. As a matter fact, now ED will be charged on installing Solar which was not the case before since it was a grey area. Refer to the tables below for more details:


Table A depicted above, prescribed ED within the limits provided by the Maharashtra Electricity Duty Act, 2016. Table B below shows the Electricity Duty that will be leviable on electricity produced from Renewable Sources of Energy.

Electricity Duty on Renewable Energy


Now let’s apply the per unit charge for a case in Maharashtra. The energy consumption charges for Residential consumers for Maharashtra is INR 13.63 (refer) for the highest slab on which 16% is levied as electricity duty. This equates to an addition of INR 2.18, increasing the tariff to INR 15.81/unit. However, for those who consume below 300 units, the maximum ED payable is INR 1.2/unit. However, those who consume below 300 units, will not perhaps invest in a Rooftop Solar System since the ED they have to pay by installing solar would more than they would have to pay without installing it. Thereby making solar installation a bad proposition. However, most of the urban population would have a consumption of more than 300 units, so perhaps only a small portion of the urban and large portion of rural population would not be incentivised to install solar.


The above table specifies that the duty for sale of power would be the same as it is for consumption of grid electricity. This would be mean passing on the cost to the consumer and hence, either an increase in tariff for consumers, or an increase of pressure on Investors and EPC. This move is in contrast to the move that was made by Rajasthan (refer), which exempts all Solar Projects from any kind of Electricity Duty (refer). Such a move in any other state would not have made any sense, however, since the electricity tariffs are already so high in Maharashtra, this move may not make much difference to open access consumers (since the overall buying tariff will continue to be lesser than grid tariff), while also keeping the DISCOMs happy.

Tanya Batra

Tanya keeps a close track of policy updates in the field of Rooftop Solar in India and likes to write blogs on its application for the end customer

8 thoughts on “Impact of Levying Electricity Duty on Solar in Maharashtra

  1. Maharashtra Government has increased the duty on electricity generated from solar. However, the MNRE notification states duty exemption for 10 years. How these two contradicting notifications will be resolved?

    1. In my opinion, this notification would over rule the one applicable at the center. It would be helpful if you could post the document on the 10-year tax holiday.

      Tanya Batra

      1. Hi

        Could you please clarify as on date will any open access consumer under RE through Solar will attract ED basis on the GOM notification for exemption for 10 years


  2. As a residential customer in Maharashtra, does this mean that I have to pay a duty of Rs 1.2/unit if I consumer solar power from a 5kW solar system installed on my rooftop? Is this duty lesser than the current duty i pay for consumption from the grid? My monthly electricity consumption is 450 units and I’m located at Mumbai (Tata Power). Would be helpful if you could revert with calculations. Much appreciated!

  3. This is one more retrograde step and certainly not in synch with Global concern over Climate change. It is surprising the enlightened CM of Maharashtra has permitted the levy of such a high Duty. It could spell doom for the nascent Solar equipment manufacturers and EPC Contractors. If the cost of generation and delivery exceeds the guaranteed revenues (PPAs for 10-20 years), then many IPPs and Captives will incur losses, default on instalments to banks and ultimately abandon the assets. It is my observation that every new business that starts with certain costs soon finds itself in distress as one or the other Central /State/Municipal authorities decide to change the rules of the game.Although many Central /State Government policies guaranteed fixed tariffs and duty exemptions for 10-15 years, this has been breached time and again. In future IPPs may insist on an irrevocable financial guarantee with regard to ROI before undertaking any major Capital investment. (Enron was a classic example). I am not aware if it is yet prevalent, but, about 15-20 years ago, IPPs had a guaranteed 16-18% return on capital employed.I guess the days of “Irrational exuberance” is over and Investors and Lenders are much more cautious than ever before.

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