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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.

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GST Rates

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.

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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

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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.

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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.

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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.

Rithesh Bajoriya
Rithesh Bajoriya
Chartered Accountant
MRN No.: 407339
City: Varanasi

As a Chartered Accountant with over 18 years of experience, I have honed my skills in the field and developed a genuine passion for writing. I specialize in crafting insightful content on topics such as GST, income tax, audits, and accounts payable. By focusing on delivering information that is both engaging and informative, my aim is to share valuable insights that resonate with readers.

Frequently Asked Questions

  • What is the GST on solar panel in India?
    It is 5% GST, applicable to both rooftop and ground-mounted solar systems.
  • Is the GST on solar inverter also 5%?
    Yes, but only when the inverter is part of a solar system. If sold separately, it attracts 18% GST.
  • What is the GST for solar power plant contracts?
    Under an EPC (Engineering, Procurement, and Construction) contract, the entire plant is taxed at 5% GST.
  • Can I claim ITC on solar equipment?
    Yes, if the equipment is used for business or commercial purposes. No ITC for residential use.
  • Is GST applicable on solar installation services?
    Yes. When installation is part of the bundled sale, the entire composite supply attracts 5% GST.
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