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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.
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.
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| Component | 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) | 28% | Not eligible for solar GST rate unless bundled |
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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.
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.
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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.
The solar system gst rate is 5% when sold as a bundled system, which includes:
If these items are purchased and billed separately, higher GST rates (up to 18% or 28%) may apply to some components.
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Businesses and registered users can claim Input Tax Credit on GST paid for solar installations if:
ITC is not available for personal or residential installations.
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.
BUSY is a simple, yet powerful GST / VAT compliant Business Accounting Software that has everything you need to grow your business.