The state government of Madhya Pradesh has announced a significant policy decision to grant VAT exemptions on renewable energy equipment purchased during the pre-GST era. This move is aimed at encouraging the growth of clean energy initiatives and addressing longstanding grievances of renewable energy developers who faced high tax costs prior to the implementation of GST. The exemption covers a range of equipment including solar panels, wind turbines, and related components, which were previously subject to varying VAT rates across different states, often increasing the overall project cost for developers.

The decision comes in response to sustained lobbying by industry associations and environmental advocacy groups, who argued that the taxation of renewable energy equipment under the old VAT regime was inconsistent with national goals to promote sustainable energy. By offering VAT exemptions, the Madhya Pradesh government has not only provided financial relief to developers but also aligned its policies more closely with the broader objectives of energy security and carbon reduction. The exemption is expected to benefit both public and private sector entities engaged in solar, wind, and hybrid projects, particularly those who had not received refunds or were facing unresolved tax demands.

Industry stakeholders have welcomed the move, calling it a step in the right direction to resolve legacy tax barriers and improve investor confidence in the sector. However, they also urged the state to clarify implementation procedures, including eligibility criteria, documentation requirements, and the mechanism for claiming past dues or pending assessments. Legal experts note that this could set a precedent for other states to consider similar exemptions, especially as India accelerates its transition towards renewable energy under both state and central government mandates.