New GST on Solar Panels and Renewable Equipment
India is pushing hard toward sustainable energy, and solar power is leading the way. Whether you’re installing solar panels at home or setting up a commercial solar power plant, knowing the applicable GST is essential. This blog breaks down the gst on solar panel, as well as on related equipment like inverters and batteries, helping you understand the solar system gst rate and its impact on your project cost.
Book A Demo
Is GST Applicable on Solar Products?
Yes, GST is applicable to solar equipment. However, the government offers a concessional GST rate for most solar products and services to promote clean energy.
The standard gst on solar panel is 5%, and the same rate applies to most key components of a solar power system.
Get a Free Demo of – Electronics Goods Billing Software
New GST Rate on Solar Equipment in India
The Government of India is updating GST rates effective after 22 Sep 2025. Below are the expected new GST rates for key solar equipment (no compensation cess).
New GST Rate on Key Solar Equipment
| Component | New GST Rate | Remarks |
|---|---|---|
| Solar panels | 5% | Main component of any solar energy setup |
| Solar inverters | 5% | When sold as part of a solar system |
| Solar power plant (EPC contract) | 5% | Composite supply of goods and services |
| Standalone solar inverter | 18% | If sold separately, not as part of solar system |
| Batteries (non-solar) | 18% | Not eligible for solar GST rate unless bundled |
Old GST Rate on Key Solar Equipment
(Old GST Rates – Applicable Until 21st September)
| Dairy Product | GST Rate | Remarks |
|---|---|---|
| Fresh milk (unpackaged) | 0% | Fully exempt |
| Pasteurized milk | 0% | Exempt if not in branded packaging |
| Curd, lassi, buttermilk | 0% | Exempt if sold unbranded and unpackaged |
| Branded curd/lassi | 5% | Taxable when sold under a brand name |
| Butter | 12% | Packaged and branded only |
| Ghee | 12% | Commonly used edible fat |
| Cheese | 12% | All types (paneer, processed cheese) |
| Condensed milk | 18% | Processed and sweetened dairy product |
| Flavored/processed milk | 12% or 18% | Depends on ingredients and packaging |
| Ice cream | 18% | Considered a luxury or indulgent item |
Get a Free Trial – Best Accounting Software For Small Business
Old GST on Solar Panels
The gst on solar panel is 5%, whether for rooftop, ground-mounted, or off-grid setups. This includes panels sold directly or as part of a larger system.
GST on Solar Inverters
The gst on solar inverter is 5% only if it is sold as part of a solar system.
If purchased separately (not with solar panels), the GST rate is 18%.
So, to get the benefit of a lower rate, it’s recommended to buy the complete solar system from a single supplier.
Get a Free Trial – Best GST Accounting Software For Small Business
GST for Solar Power Plant Projects
For commercial solar projects or EPC (Engineering, Procurement, and Construction) contracts, the gst for solar power plant is also 5%, provided it is a composite supply.
This means the entire system — panels, inverters, cabling, structure, and installation — is billed together under one contract.
What Is the Solar System GST Rate?
The solar system gst rate is 5% when sold as a bundled system, which includes:
- Solar panels
- Inverter
- Mounting structure
- Controller
- Installation service
If these items are purchased and billed separately, higher GST rates (up to 18% or 28%) may apply to some components.
Get a Free Demo – Best Billing and Invoicing Software
Input Tax Credit (ITC) on Solar Installations
Businesses and registered users can claim Input Tax Credit on GST paid for solar installations if:
- The solar system is used for business purposes
- GST invoices are available
- The buyer is registered under GST
ITC is not available for personal or residential installations.
Conclusion
To promote clean energy, the government offers a concessional 5% gst on solar panel and most solar system components. Whether you’re setting up a home solar system or a commercial power plant, understanding the solar system gst rate can help you plan better and reduce costs. For best benefits, it’s ideal to buy and install the complete system as a package from a single vendor.
