In general depreciation is 20 % on plant and machinery for any business.
In the case of solar power generation, in order to incentivize the Solar power plant owner the Government of India has allowed claiming 80% depreciation in year one of the commissioning of the solar power generation plant.
This can provide significant savings to a solar energy plant owner who is a taxable assesse and has sufficient profits against which the depreciation can be charged.
Example: Let us assume that the total project cost is Rs.100000.00 (One Lakh)
|1||Cost of Solar Rooftop plant (A)||Rs.100000|
|2||Accelerated Depreciation @80%||Rs.80000|
|3||Corporate Tax Rate||35%|
|4||Tax saved through depreciation (B)||Rs.28000|
|5||Net cost of solar rooftop plant (A)-(B)||Rs.72000|