The Uttar Pradesh Electricity Regulatory Commission (UPERC) has ruled that the reduction in GST on renewable energy equipment from 12% to 5% will be treated as a “Change in Law” event under power purchase agreements signed under the PM-KUSUM Component-C2 scheme.
In a suo motu order issued on June 23, the Commission said the GST reduction, effective September 22, 2025, lowers the cost of procuring solar and other renewable energy equipment and therefore reduces the overall capital cost of projects. The resulting financial benefit must be passed on to the power procurer, Uttar Pradesh Power Corporation Ltd (UPPCL), and, ultimately, to consumers.
UPERC noted that the Ministry of Power had advised regulators to recognise the GST reduction as a Change in Law event and ensure that the benefits are transferred to consumers at the earliest.
The order applies to projects whose bids were submitted before September 22, 2025, and where invoices were raised or payments made on or after that date. The Commission directed that project-wise assessments be conducted to quantify the actual savings resulting from the GST reduction.
To implement the exercise, UPERC has ordered the constitution of expert committees comprising representatives of UPNEDA, UPPCL, the concerned discom and finance officials. Developers will be required to submit supporting documents, including invoices, payment records and auditor certificates, to establish the benefit accrued.
The Commission said revised tariffs would be determined on a project-by-project basis and directed developers and UPPCL to complete the assessment process within 90 days of the project’s commercial operation date.
