For solar system, a company can claim 80% depreciation in the first year itself leading to savings on income tax on overall profit. This benefit can be claimed by both commercial and non-commercial entities. The procedure for the availing the financial incentive includes the following process:
To claim the financial incentive, an application needs to be written to MNRE in the prescribed application form for project approval. A commercial entity seeking to avail incentive needs to specify its preference for capital or interest subsidy. Once approved, in case of interest subsidy, the MNRE forwards the application to the commercial bank for the soft loan. In case of capital subsidy option, MNRE provides subsidy money in 3 phases: start of project, mid-way through the project and after the successful completion of the project.
Apart from MNRE, the entities can avail of commercial loans from organizations such as SIDBI at 15% interest rate typically for 7 years with 1 year moratorium period.