Accelerated Depreciation Tax Benefit For Commercial Units

//Accelerated Depreciation Tax Benefit For Commercial Units

Is this right time for the  industrial and commercial units to invest on Rooftop Solar power units?


Ministry of New and Renewable Energy (MNRE ) has set a target to install 227 Gigawatt by 31 March 2022.
Government of India offered tax incentives of accelerated depreciation of fixed assets equated with the solar power plant to promote green energy generation.


As per the 2018–19 union budget, Industrial and commercial establishments can avail 40% accelerated depreciation benefits. comparing to 80% in the previous year.

Corporates can claim these tax benefits in 3 consecutive years. First-year 40 %, second year 40% and balance 20% in the third year. For eg, If any commercial or industrial user, falls under an income tax bracket of 30%, install a on-grid solar plant valued at Rs. 10 Lakh in a given financial year, under accelerated depreciation, the user will be able to claim an annual depreciation of 40% for the Rs. 10 Lakh investment.


1st year company will save Rs.1,20,000 (10,00,000 x 40% x 30%)
2nd year company year will save Rs.1,20,000 (10,00,000 x 40% x 30%)
3rd year company year will save Rs.60,000 (10,00,000 x 20% x 30%)


In effect Company can save Rs.300,000 from tax and the money saved from the electricity bill, the company can get the return on investment in 3 years.


Currently, PV cells are producing their maximum efficiency and price at the optimum level, this is the right time for the corporate to invest in solar power generation.

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