---
title: "New GST on Solar Panel 2026: 5% Rate on Solar Panels"
description: "New GST rate on solar panels in 2026 is 5% on solar modules, cells and panel systems. Stay GST-compliant with Busy and apply the correct rate automatically."
canonical: "https://busy.in/gst-rates/solar-panel/"
author: "Rithesh Bajoriya"
published: "2025-05-15T09:27:44.000Z"
category: "GST Rates"
---

-   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.

# 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 hsn code and gst rate** and its impact on your project cost.

## **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 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 |

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## **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**.

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## **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

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## 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.

## About the author

**Rithesh Bajoriya**

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?

Solar panels generally attract 5% GST after 22 Sep 2025.

### Is the GST on solar inverter also 5%?

A solar-specific inverter may qualify for the concessional rate, but a generic standalone inverter or UPS generally attracts 18% GST.

### What is the GST for solar power plant contracts?

Solar EPC or project contracts should not be treated as a flat 5% GST supply. They are generally taxed under the 70:30 valuation rule, which results in an effective GST incidence of 8.9% after 22 Sep 2025.

### Can I claim ITC on solar equipment?

Generally, ITC may be available where the equipment is used for business purposes and normal GST conditions are met. Personal residential use does not normally qualify.

### Is GST applicable to solar installation services?

Yes. Installation and related services are taxable, and in project supplies they are generally covered through the notified 70:30 valuation mechanism rather than a flat 5% rate on the full contract.

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