New GST on Solar Panels and Renewable Equipment
Quick Summary
- The GST on solar panels and most solar equipment in India is 5%, which helps promote clean energy.
- Solar inverters are taxed at 5% when part of a solar system, but 18% if sold separately.
- Commercial solar power plant projects under EPC contracts are taxed at 5% GST if billed as a single package.
- Businesses can claim Input Tax Credit on GST paid for solar installations used for business purposes, but not for residential use.
- To get the best GST benefits, it's advised to buy and install the complete solar system as one package from a single vendor.
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 hsn code and 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 on Solar Equipment in India
Solar equipment in India does not all fall into one single GST bucket. The main concessional entry covers renewable energy devices and parts for their manufacture. After 22 Sep 2025, goods in this concessional renewable energy category moved from 12% GST to 5% GST. But not every item used in a solar project gets that rate. For example, generic inverters, batteries, and mounting structures need separate treatment.
GST Rate on Key Solar Equipments
| Component / Supply Type | New GST Rate (After 22 Sep 2025) |
Old GST Rate (Before 22 Sep 2025) |
Note |
|---|---|---|---|
| Solar panels / PV modules / PV cells | 5% | 12% | Covered under renewable energy devices |
| Solar power based devices / solar power generator | 5% | 12% | Covered under concessional renewable energy entry |
| Solar inverter, when genuinely supplied as a solar power based device | Generally 5% | Generally 12% | Classification must support treatment as solar device |
| Standalone generic inverter / UPS | 18% | 18% | Not automatically covered by solar concessional entry |
| Batteries | 18% | 18% | Battery heading now has a uniform 18% rate |
| Solar panel mounting structure | 18% | 18% | Metal structures are not covered by the concessional solar entry |
| Solar power project / EPC supply involving goods + installation | Effective 8.9% under 70:30 valuation | Effective 13.8% under 70:30 valuation | Not a flat 5% on the full contract |
Get a Free Trial – Best GST Accounting Software For Small Business
(After 22 Sep 2025) 5%
(Before 22 Sep 2025) 12%
(After 22 Sep 2025) 5%
(Before 22 Sep 2025) 12%
(After 22 Sep 2025) Generally 5%
(Before 22 Sep 2025) Generally 12%
(After 22 Sep 2025) 18%
(Before 22 Sep 2025) 18%
(After 22 Sep 2025) 18%
(Before 22 Sep 2025) 18%
(After 22 Sep 2025) 18%
(Before 22 Sep 2025) 18%
(After 22 Sep 2025) Effective 8.9% under 70:30 valuation
(Before 22 Sep 2025) Effective 13.8% under 70:30 valuation
GST on Solar Panels
Solar panels and PV modules fall within the concessional renewable energy framework. After 22 Sep 2025, the applicable GST rate is 5%. Before that change, the concessional rate was 12% GST.
GST on Solar Inverters
A solar-specific inverter may qualify for the concessional renewable energy rate if it is genuinely classifiable as a solar power-based device. But a generic standalone inverter or UPS is not automatically covered by that concessional entry and generally attracts 18% GST. So, avoid a blanket rule that every separately sold inverter is either always 5% or always 18%.
GST on Solar Power Plant Projects / EPC Contracts
For renewable energy project supplies that combine eligible goods with installation, engineering, or construction services, GST is ordinarily applied through the notified 70:30 valuation rule:
- 70% of the gross value is treated as goods
- 30% of the gross value is treated as a taxable service
Get a Free Demo – Best Billing and Invoicing Software
How to Calculate GST on Solar Equipment
The calculation depends on whether you are billing: a concessional 5% solar device, a standard 18% item such as a generic inverter, battery, or mounting structure and a solar EPC or project supply under the 70:30 valuation rule
Example 1: Solar panel at 5%
Suppose the taxable value of solar panels is Rs 1,00,000.
GST = 1,00,000 × 5% = Rs 5,000
Final Invoice Value = 1,00,000 + 5,000 = Rs 1,05,000
Example 2: Battery at 18%
Suppose the taxable value of batteries is Rs 50,000.
GST = 50,000 × 18% = Rs 9,000
Final Invoice Value = 50,000 + 9,000 = Rs 59,000
Example 3: Mounting structure at 18%
Suppose the taxable value of the mounting structure is Rs 80,000.
GST = 80,000 × 18% = Rs 14,400
Final Invoice Value = 80,000 + 14,400 = Rs 94,400
Example 4: Solar EPC / project contract under 70:30 valuation
Suppose the total contract value is Rs 10,00,000 after 22 Sep 2025.
Goods value = 70% of 10,00,000 = Rs 7,00,000
GST on goods @ 5% = Rs 35,000
Service value = 30% of 10,00,000 = Rs 3,00,000
GST on service @ 18% = Rs 54,000
Total GST = Rs 89,000
Final Contract Value = Rs 10,89,000
Example 5: Same EPC contract before 22 Sep 2025
If the same contract value was billed before the concessional goods rate was reduced:
Goods value = Rs 7,00,000
GST on goods @ 12% = Rs 84,000
Service value = Rs 3,00,000
GST on service @ 18% = Rs 54,000
Total GST = Rs 1,38,000
Final Contract Value = Rs 11,38,000
Input Tax Credit on Solar Installations
ITC may generally be available where solar equipment is used in the course or furtherance of business, subject to the normal GST conditions and restrictions. Business use is the starting point, but civil and immovable property elements need care, because works contract and construction-related credits can be blocked except in eligible plant and machinery cases. Personal residential use does not normally qualify.
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.
