The Central Electricity Regulatory Commission (CERC) has directed renewable energy (RE) developers to revise monthly tariffs or issue refunds to reflect the GST rate from 12% to 5%.The regulator issued the directives in a suo motu ruling intended to ensure benefits of the rate reduction reach the recipients.Renewable energy generators have been asked to provide “relevant documentation, backed by an auditor certificate, to enable the contracting parties to carry out reconciliation on account of reduction of the expenditure by exhibiting clear and one-to-one correlation with the projects and the invoices raised.”The GST revision, effective Sept. 22, 2025, has changed the cost of inputs required for renewable energy generation. It has impacted the procurement of renewable energy devices and components. “Any reduction in rate of tax on any supply of goods or services or the benefit of input tax credit shall be passed on to the recipient by way of commensurate reduction in prices,” CERC said. The commission added, “We observe that a decrease in the GST rate from 12% to 5% has the effect of saving in the project's net cost.”The directive pushes for stricter compliance, requiring developers and discoms to keep better records, submit clearer filings and follow stronger procedures when seeking change-in-law relief.Power purchase agreements (PPAs) provide for relief in the form of tariff adjustments for renewable energy generating stations or distribution licensees in case of a change in law. The regulator is required to determine the effect of such events on tariffs and grant appropriate relief.In 2021, the GST rate was revised from 5% to 12%, which led to a change in the cost of inputs required for renewable energy generation. At the time, the regulator allowed the change-in-law impact to be reflected in tariffs, according to a report in The Economic Times.The recent GST revision on renewable energy devices and components, reducing rates from 12% to 5%, has again altered the cost of inputs for renewable energy generation.