Kerala has reportedly violated central regulations by imposing an energy duty on solar power production. Despite previous warnings, the state increased this duty by 15 paise per unit in the 2024-25 state budget, effective from April.
This has significantly contributed to the unprecedented rise in electricity bills for households with rooftop solar panels.
According to central regulations, no duty should be levied on the production of solar, wind, hydroelectric, and nuclear power. However, states like Kerala have been imposing such duties and cess, prompting the energy ministry to issue circulars and letters to state chief secretaries.
As per the seventh schedule of the Constitution, states are only entitled to levy duty and cess on the use and sale of electricity, not on its production.
Additionally, duty and cess cannot be collected across states. While electricity falls under the concurrent list in the Constitution, allowing both central and state governments to create laws, Kerala has been charging 1.2 paise per unit from consumers producing electricity through various means since 1963.
The increase in rooftop solar panel users has led the state government to see this as an opportunity to boost income by imposing production duties, resulting in the current dilemma.
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