New GST on Solar Panels and Renewable Equipment
- The solar panel GST rate depends on the applicable HSN classification and notified GST provisions.
- GST on solar panels is 5% for solar PV modules and specified renewable energy devices covered under the applicable GST entry.
- Solar inverters may attract GST based on whether they are supplied as part of a qualifying solar power generating system or supplied separately under their applicable classification.
- Solar power plant EPC contracts are taxed according to applicable GST provisions, including the valuation rules prescribed for renewable energy projects.
- Businesses can claim eligible Input Tax Credit (ITC) on GST paid for solar installations used for business purposes, subject to GST conditions.
- GST treatment should be determined based on the product classification, contract structure, and applicable GST provisions.
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.
Register Solar Panel Installations as Fixed Assets in BUSY
Join our guided walkthrough to see how BUSY can transform your business operations.
Is GST Applicable on Solar Products?
Yes, GST is applicable to solar equipment. However, the applicable GST rate depends on the product classification, HSN code, and whether the item qualifies under the concessional renewable energy device category.
The GST on solar panels is 5% for solar panels/PV modules covered under the applicable renewable energy device classification. Other components of a solar power system may attract different GST rates depending on their HSN classification.
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 specified renewable energy devices |
| Solar power-based devices / solar power generator | 5% | 12% | Covered under concessional renewable energy entry |
| Solar inverter supplied as part of a qualifying solar power-based device/system | Classification dependent | Classification dependent | Depends on applicable HSN classification and supply conditions |
| Standalone generic inverter / UPS | Applicable rate based on classification | Applicable rate based on classification | Not automatically covered under solar concessional entry |
| Batteries | Applicable rate based on classification | Applicable rate based on classification | Depends on battery classification |
| Solar panel mounting structure | Applicable rate based on classification | Applicable rate based on classification | Not automatically covered under solar concessional entry |
| Solar power project / EPC supply involving goods + installation | As per applicable valuation rules | As per applicable valuation rules | Not a flat 5% GST on the full contract |
Component / Supply Type
New GST Rate (After 22 Sep 2025)
Old GST Rate (Before 22 Sep 2025)
Note
Component / Supply Type
New GST Rate (After 22 Sep 2025)
Old GST Rate (Before 22 Sep 2025)
Note
Component / Supply Type
New GST Rate (After 22 Sep 2025)
Old GST Rate (Before 22 Sep 2025)
Note
Component / Supply Type
New GST Rate (After 22 Sep 2025)
Old GST Rate (Before 22 Sep 2025)
Note
Component / Supply Type
New GST Rate (After 22 Sep 2025)
Old GST Rate (Before 22 Sep 2025)
Note
Component / Supply Type
New GST Rate (After 22 Sep 2025)
Old GST Rate (Before 22 Sep 2025)
Note
Component / Supply Type
New GST Rate (After 22 Sep 2025)
Old GST Rate (Before 22 Sep 2025)
Note
Get a Free Trial – Best GST Accounting Software For Small Business
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.
Track Serial Numbers of Solar Panels Installed at Each Site
* No credit card required
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 Applicable 70:30 Valuation Rule
For eligible solar power generating system EPC/composite supplies, GST is calculated as per the prescribed 70:30 valuation mechanism, where applicable.
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 eligible solar EPC/composite supply was billed before the concessional goods rate revision:
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 provides a concessional 5% GST on solar panels and specified renewable energy devices covered under the applicable GST classification. Other solar system components may attract different GST rates depending on their HSN classification. Understanding the applicable solar panel GST and classification can help businesses plan costs accurately.
