GST on Solar Panels in India: 2026 Guide for Installers

GST on solar panels in India is 5% from 22 September 2025, down from 12%. But almost no installer bills a bare panel: on a supply-and-installation contract the rate notification deems 70% of the value to be goods at 5% and 30% to be services at 18%, which is a blended 8.9% on the contract. This guide covers the rates, the arithmetic, HSN and SAC codes, a worked EPC invoice, input tax credit and the filing mistakes that bring notices.

What is the GST on solar panels in India after September 2025?

The 56th GST Council meeting cut the rate on renewable energy devices from 12% to 5%. CBIC gave it effect through the rate notification dated 17 September 2025, which came into force on 22 September 2025.

Entry 437 of Schedule I of that notification covers, under chapters 84, 85 or 94, a list of renewable energy devices and parts for their manufacture: bio-gas plants, solar power-based devices, solar power generators, wind mills, waste-to-energy plants, solar lanterns, ocean and tidal energy devices, and photovoltaic cells, whether or not assembled in modules or made up into panels. All of them sit at 2.5% CGST plus 2.5% SGST, so 5% GST.

One point trips people up. The HSN code for solar panels is heading 8541, tariff item 8541 43 00, and heading 8541 as a general description sits in the 18% schedule. The 5% rate comes from the description-based renewable energy devices entry, not from the chapter heading on its own. So the question on an invoice line is not only which HSN code to use, but what the item is in the words of the rate entry.

GST rate on solar system components: a 2026 rate table

What you are billing	Typical HSN / SAC	GST rate	Notes
Solar PV cells and modules	8541 (8541 43 00)	5%	Renewable energy devices entry, from 22 Sept 2025
Complete solar power generating system, goods only	84 / 85 / 94	5%	Supply without installation services
Solar inverter or PCU supplied with the system	8504	5%	As a solar power-based device; confirm with your CA
General purpose inverter, UPS, static converter sold standalone	8504	18%	Schedule II entry for transformers and static converters
Batteries, including lithium-ion	8507	18%	All batteries under 8507 uniformly 18% from 22 Sept 2025
Mounting structure fabricated and billed separately	7308	18%	Structures of iron or steel
DC and AC cables	8544	18%	Insulated wire and cable
ACDB / DCDB, switchgear, SPDs	8537 / 8536	18%	Boards and panels, switching apparatus
Supply and installation of a rooftop system	Goods entry + 9954	8.9% effective	70% goods at 5% + 30% services at 18%
Installation or commissioning service only	9954 (995461)	18%	Customer supplies the material
AMC / CMC, O&M, cleaning	9987	18%	Maintenance and repair services
Design, DPR, consultancy	9983	18%	Technical and professional services

The solar GST 70:30 rule and the 8.9% blended rate

Entry 437 carries an Explanation. If those goods are supplied along with other goods and services, one of which is the taxable service of construction, engineering, installation or other technical work relating to setting up such a system, then the value of the goods is deemed to be 70% of the gross consideration charged, and the remaining 30% is deemed to be the value of that service. The Explanation points to S. No. 38 of the services rate notification, 11/2017-Central Tax (Rate), which taxes that service at 18%.

This is a deeming rule, not an option. It does not matter that your actual material cost is 82% of the contract. Once the entry applies, the split is 70:30.

Leg	Deemed share	Rate	Contribution to the contract
Goods	70%	5%	0.70 × 5% = 3.5%
Services	30%	18%	0.30 × 18% = 5.4%
Blended rate	100%	—	8.9% (it was 13.8% when goods were at 12%)

Example: a 3 kW contract priced at ₹1,80,000 before tax. Goods ₹1,26,000 × 5% = ₹6,300. Services ₹54,000 × 18% = ₹9,720. Total GST ₹16,020, invoice value ₹1,96,020. Those are the same numbers used in our solar quotation format guide, so your quote and your invoice agree.

Works contract or supply of goods? When the split applies

Pure supply of goods. You sell modules, an inverter and a structure ex-works, and the customer or someone else installs them. The renewable energy devices entry applies to the whole invoice at 5%. No 70:30.
Goods plus installation. The normal rooftop EPC job. The 70:30 deeming applies and the blended rate is 8.9%.
Pure service. The customer bought the material and you only erect, wire and commission. There is no goods leg, so GST on solar installation services applies to the whole invoice at 18% under SAC 9954.

Works contract has a separate meaning. Section 2(119) of the CGST Act defines it as a contract for construction, fabrication, erection, installation and similar work on immovable property, where property in goods is also transferred. It is treated as a supply of services and taxed at 18% on the full value.

Whether a rooftop plant is immovable property has been argued both ways in advance rulings. A structure that is bolted down and can be unbolted and moved is usually treated as movable, which keeps you inside the 70:30 route; a ground-mount plant cast into civil foundations looks more like immovable property, and some rulings have taxed such contracts at 18%. Rulings bind only the applicant, so settle this with your CA before you standardise an invoice format.

Standalone items: batteries, inverters, structures and AMC

The blended rate applies to the solar system contract. Anything billed on its own follows its own entry.

Batteries. All batteries under heading 8507, including lithium-ion, are at 18% from 22 September 2025; earlier, lithium-ion was 18% and other batteries 28%. A hybrid or off-grid job therefore carries a high-rate component, so bill the battery bank on its own line.
Inverters. GST on a solar inverter depends on what it is sold as: an inverter or PCU supplied as part of the solar power generating system goes with the system, while a general purpose inverter or UPS sold on its own is a static converter under 8504 at 18%.
Structure fabrication. Supplied as part of the system, it is inside the contract. Fabricated and billed separately as steel structure work, it is 18%.
AMC, CMC and cleaning. Maintenance is a service at 18%. If your PM Surya Ghar five-year comprehensive maintenance is bundled free into the system price, say so in the contract rather than raising a nil invoice later.

How to raise a solar EPC GST invoice correctly

A tax invoice under Rule 46 needs your name, address and GSTIN; a consecutive serial number and date; the customer's details with GSTIN if registered; the place of supply with state name and code; HSN or SAC on every line; description, quantity, unit and taxable value after discount; the rate and amount of CGST, SGST, IGST or cess; whether reverse charge applies; and a signature. For an unregistered customer billed ₹50,000 or more, add their name, address and delivery address.

CGST + SGST or IGST? Follow the place of supply, not the customer's billing address. For services directly relating to immovable property, the place of supply is where the property is. For the goods, it is where the movement ends. So a Delhi-registered installer commissioning a rooftop plant in Noida has a place of supply in Uttar Pradesh and charges IGST, even if the customer's office is in Delhi. Same state as your registration and the site, and it is CGST + SGST.

Worked invoice example: 5 kW rooftop, intra-state

Example: a 5 kW on-grid contract with a pre-tax value of ₹3,00,000, installer and site in the same state. The value is illustrative; for what moves real prices, see rooftop solar cost per kW in India.

Line	HSN / SAC	Taxable value	Rate	CGST	SGST
Solar power generating system, 5 kWp (deemed goods, 70%)	8541	₹2,10,000	5%	₹5,250	₹5,250
Erection, installation and commissioning (deemed service, 30%)	9954	₹90,000	18%	₹8,100	₹8,100
Total	—	₹3,00,000	8.9%	₹13,350	₹13,350

Total GST ₹26,700, invoice value ₹3,26,700. If the site were in another state, the same two lines would carry IGST of ₹10,500 and ₹16,200 instead.

GST on the subsidy amount

Under the standard PM Surya Ghar route the customer pays the full contract value and the central subsidy is credited to their own bank account after installation and DISCOM inspection. It is not a price support paid to you. So GST goes on the full ₹3,00,000, and the subsidy appears as a separate line below the invoice total, followed by the effective net cost, as in the PM Surya Ghar subsidy guide. Our solar subsidy and savings calculator produces the same net-cost line.

Input tax credit basics for solar installers

You can claim input tax credit on modules, inverters, cables, structures, ACDB and DCDB, freight and the services you buy, provided they are used for taxable outward supplies, you hold a valid invoice, it appears in your GSTR-2B, and you have filed the relevant return. Two things matter more in solar than in most trades:

Inverted duty structure. Much of what you buy is at 18% while your output on the goods leg is 5%, so credit accumulates. Refund of unutilised credit is available under Section 54(3), and the GST Council's own FAQ acknowledged the deeper inversion and pointed to that refund route. Plan the refund cycle into cash flow instead of treating stuck credit as a cost.
Pay your suppliers within 180 days. Under Rule 37, credit on an invoice you have not paid within 180 days must be reversed with interest, and reclaimed when you pay.

Commercial customers will ask whether they can claim credit on your invoice. Credit for constructing immovable property is blocked under Section 17(5), but plant and machinery is carved out of that bar, and a rooftop plant is usually argued to be plant and machinery. Where the customer sells the power as an exempt supply, restrictions apply at their end. Tell them to get it confirmed rather than promising an answer in a proposal.

E-invoicing and GSTR-1 basics

E-invoicing applies to B2B supplies and exports once your aggregate annual turnover crossed ₹5 crore in any financial year from 2017-18 onwards, a threshold in force since 1 August 2023. Crossing it in one year brings you in from the start of the next financial year, so a firm that touched ₹5 crore in 2025-26 had to be ready on 1 April 2026. B2C invoices to homeowners are outside it.

30-day reporting limit. Taxpayers at ₹10 crore or more cannot report an invoice, credit note or debit note on the IRP more than 30 days after its date. Miss the window and no IRN can be generated, so the document is not a valid invoice.
GSTR-1 is due by the 11th of the following month, or the 13th after the quarter under QRMP, with the optional IFF. GSTR-3B follows on the 20th, staggered for QRMP. GSTR-1A lets you fix a GSTR-1 before filing that period's GSTR-3B.
HSN summary. Table 12 of GSTR-1 needs 4-digit HSN up to ₹5 crore turnover and 6-digit above it, entered from a dropdown with B2B and B2C separate. Made-up codes fail validation.
Three-year bar. Returns under Sections 37, 39, 44 and 52 cannot be filed once three years have passed from the due date, enforced on the portal since the November 2025 tax period.

Common GST mistakes that get solar installers a notice

Charging a flat 5% on a turnkey job. The most common error since the rate cut. It is a short payment of 3.9% on every contract, with interest.
Still using 13.8%. That was 70:30 when goods were at 12%. Using it now means you are over-collecting from customers.
Splitting the contract to dodge the deeming. A material invoice at 5% plus a token labour invoice, when it is really one supply-and-install order, invites re-characterisation.
CGST + SGST on an out-of-state site. Wrong tax head means you pay again under the correct head and then chase a refund of the first payment.
Subsidy netted off the taxable value. Covered above.
GSTR-1, GSTR-3B and GSTR-2B mismatches. The system issues an automated intimation before any officer looks at your file, and credit your supplier has not filed is not yours yet.
Wrong or missing HSN and SAC. Table 12 validation failures, then classification questions.
Batteries billed inside the system value at 8.9%. They are 18% goods on their own line.
Credit notes raised too late. A credit note for a financial year cannot be reported after the November return of the following year.

The rule for GST on solar panels in India is short; what goes wrong is quote-and-invoice discipline. Agree one rate structure and one invoice template and have the whole team use it. Proposal tools like PitchSun keep the tax lines consistent between the quotation and what the customer signs. If you are still setting up, our guide on starting a solar business in India covers registration and the rest of the paperwork.

Everything above is as of September 2026 and does change. Check the current notification on the CBIC or GST Council site, and have your CA sign off on your invoice format for your contract type and state.

Frequently asked questions

What is the GST rate on solar panels in India?

Solar PV cells and modules are taxed at 5% GST from 22 September 2025, down from 12%. The 5% rate comes from the renewable energy devices entry in the rate notification, which covers photovoltaic cells whether or not assembled in modules or panels.

What is the 70:30 rule for GST on solar?

When solar goods are supplied along with construction, engineering or installation services, the rate notification deems 70% of the gross consideration to be the value of goods and 30% to be the value of services. The goods part is taxed at 5% and the services part at 18%.

How is the 8.9% blended GST on a solar system calculated?

70% of the contract at 5% contributes 3.5%, and 30% at 18% contributes 5.4%. Added together that is 8.9% of the pre-tax contract value. On a contract of Rs 3,00,000 the GST works out to Rs 26,700.

What is the GST rate on a solar inverter?

A solar inverter or PCU supplied as part of a solar power generating system goes into the same renewable energy devices entry at 5%, and into the 70:30 split if installation is included. A general purpose inverter, UPS or static converter sold on its own falls under heading 8504 at 18%. Get borderline cases confirmed by your CA.

Is GST charged on the PM Surya Ghar subsidy amount?

Under the standard route the customer pays the full contract value and the central subsidy is credited to their own bank account after commissioning, so the installer charges GST on the full contract value and does not deduct the subsidy from the taxable value. Confirm the treatment for your specific contract model with your CA.

What HSN code should I use for solar panels on a GST invoice?

Solar modules are classified under heading 8541, tariff item 8541 43 00 for photovoltaic cells assembled in modules or made up into panels. Installation services are usually billed under SAC 9954, commonly 995461 for electrical installation work.