India May Expand Simple Tax Scheme to Renewable Energy to Attract Foreign Investors

India May Expand Simple Tax Scheme to Renewable Energy to Attract Foreign Investors

January 10, 2026

The Indian government is considering widening a simplified tax system, known as the presumptive tax regime, to include the renewable energy sector for foreign companies. Officials said the move is aimed at encouraging overseas firms to bring expertise for building and supporting clean energy projects such as solar plants and other renewable assets, while the impact on government revenue is still being reviewed. 

India’s finance and energy policymakers are exploring the possibility of extending a tax regime that lets non-resident firms pay tax based on a fixed percentage of income rather than detailed accounts, to the renewable energy industry. This sector includes solar, wind and bioenergy services, particularly work carried out by foreign companies that provide technical support or specialized services. Final approval depends on assessments of how much revenue the change might cost the government. 

Under the existing rules introduced in the Finance Act 2025, overseas companies in select technology and services fields can choose this presumptive system, which simplifies tax compliance and offers predictability by taxing a set portion of gross receipts as profit. The government is now studying whether a similar arrangement could be extended to clean energy, which currently relies heavily on imported technology and how. Supporters of the idea say clearer, easier tax terms could lower compliance burdens and make India a more attractive destination for foreign investment in its clean-energy transition. If implemented, safeguards such as minimum investment requirements and eligibility conditions would likely be set by the Ministry of New and Renewable Energy.