Adani Green Moves Karnataka HC Against 1% Property Tax on Solar Plants

Bengaluru, Oct 14 : Adani Green Energy (UP) Limited has approached the Karnataka High Court challenging the state government's decision to levy property tax at one per cent of the property's value on solar power plants.

The company has challenged the Karnataka Grama Swaraj and Panchayat Raj (Grama Panchayat Taxes, Rates and Fees) Rules, 2025, notified on October 17 last year. It has also sought the cancellation of tax demand notices and assessment proceedings initiated by gram panchayat authorities for the 2026-27 financial year.

In its petition, the company argued that solar power plants differ from conventional industries and should not be taxed on the same basis. It said the government had earlier prescribed an annual tax of Rs 5,000 per megawatt for renewable energy units, including solar power plants, and that it had been paying taxes under this system in accordance with government circulars issued in February 2018 and March 2020.

The company operates a solar power plant within the jurisdictions of MB Halli, H Byadarahalli and Mattikere gram panchayats in Channapatna and Magadi taluks of Bengaluru South district.

According to the petition, the government subsequently proposed increasing the annual tax to Rs 10,000 per megawatt. However, the final rules notified in October 2025 classified solar power plants as regular industrial buildings and imposed property tax at one per cent of the property's value.

The company alleged that the government introduced the change without providing reasons or consulting stakeholders in the renewable energy sector.

It contended that solar power plants do not function like conventional industries and that calculating property tax based on the value of the property, rather than electricity-generation capacity, would substantially increase the financial burden on renewable energy projects.

The company further argued that the new rules were discriminatory, as certain other categories of industrial buildings attracted lower property tax rates.

It has also challenged the demand notices, alleging that the gram panchayat authorities failed to follow the procedure prescribed under the Karnataka Grama Swaraj and Panchayat Raj Act, 1993.

The Karnataka High Court's response to the petition was not available at the time of filing this report.