Subsidy paid by Government is deductible for arriving at taxable value for chargeability of GST

In M/s. Greenbrilliance Renewable Energy LLP [ADVANCE RULING NO. GUJ/GAAR/R/34/2021 dated July 30, 2021] M/s. Greenbrilliance Renewable Energy LLP (“the Applicant”) is a channel partner to execute the solar rooftop system in Gujarat under the Surya Gujarat Yojna (“SGY Scheme”), and has submitted that under SGY Scheme, beneficiaries can avail benefits of 40% subsidy on solar system cost upto 3KW and 20% subsidy of solar system cost for systems from 3KW-10KW.

The Applicant has sought clarification on the amount of subsidy to be reduced for arriving at taxable value of the solar system from the price declared by the Nodal Agency and whether the Goods and Services Tax (“GST”) liability would be on the taxable value calculated after subtracting the subsidy amount from the system price.

Further, the Applicant also seeks clarification on the implication of Section 17(2) of Central Goods and Services Tax Act, 2017 (“CGST Act”) i.e. GST ITC reversal, if taxable value is derived after subtracting the subsidy amount from the system price.

The Gujarat Authority of Advance Ruling (“GAAR”) noted that with the information submitted by Gujarat Urja Vikas Nigam ltd (GUVNL), the authorized nodal agency for implementation of the scheme in the State, it can be inferred that the subsidy is given/borne by the Government and that, such portion borne by Government shall not be included in the value of the supply to arrive at the taxable value under Section 15(2)(e) of CGST Act.

Observed, the subject supply of the Applicant being a taxable supply, and that taxable value of the charging GST is arrived after subtracting subsidy, does not alter the nature of the supply. Therefore, it remains a taxable supply having no implication under Section 17(2) of the CGST Act.

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