SAC Code & GST on Solar Installation Services in India

GST on solar installation depends on how you bill it. Installation billed on its own is a service at 18%. When one supplier supplies the solar system and installs it under one contract, the notification deems 70% of the gross consideration to be goods at 5% and 30% to be the installation service at 18%, an effective 8.9% since 22 September 2025. The SAC heading is 9954, and 995461 is the 6-digit code installers most often print.

This page owns the service side of solar GST: what rate an installation line carries, which SAC goes on it, and how the service leg works inside a bundled contract. For goods rates see HSN codes and GST rates for solar components, and for the whole-system view see GST on solar systems in India.

GST on solar installation at a glance

How you bill it	GST	Note
Installation labour only (customer buys panels elsewhere)	18%	Service under the serial 38 headings
Supply of solar system plus installation, one contract	8.9% effective: 70% of value at 5%, 30% at 18%	Explanation under entry 437
Sub-contractor labour billed to an EPC	18%	A service supplied on its own
AMC and O&M	18%	Separate agreement and invoice
Contract signed before 22 Sep 2025	Depends on time of supply	CA question; the same split with goods at 12% was 13.8% effective

What changed on 22 September 2025

Goods moved from 12% to 5%. The service rate did not change: it was 18% before and is 18% now. The 56th GST Council meeting of 3 September 2025 made the goods decision, and the Council FAQ at Q50 records it. The change took effect on 22 September 2025, as stated in the PIB release from the Ministry of New and Renewable Energy.

The 70:30 mechanics are in the Explanation under Schedule I entry 437 of Notification 9/2025: where the notified solar goods are supplied with other goods and services, one of which is the serial 38 service of Notification 11/2017 (headings 9954, 9983 or 9987), the goods value is deemed to be 70% of the gross consideration, and the other 30% is deemed to be the service. Notification 15/2025 (Central Tax, Rate) rewrote the Explanation to serial 38 so it reads with entry 437. Effective rate: 0.7 x 5% + 0.3 x 18% = 8.9%. Both notifications are on the CBIC GST rates page.

Which SAC code goes on the installation line

SAC codes are the service equivalent of HSN. Serial 38 of Notification 11/2017 refers to headings:

• 9954: construction services. Group 99546 is installation services, and 995461 is "electrical installation services including electrical wiring and fitting services" on the official SAC list, which is why most solar installers print it.
• 9983: other professional, technical and business services (engineering and design work).
• 9987: maintenance, repair and installation services except construction.

For AMC and O&M, heading 9987 applies, and 998719 (maintenance and repair of other machinery and equipment) is the code in common use. Several codes that circulate online do not fit solar. 998714 is maintenance of transport machinery. 995431 is demolition. "9954 40" is not an official code. Use the heading from the notification and put your CA's chosen 6-digit code under it.

How many digits to print depends on turnover: 4 up to ₹5 crore on B2B invoices and 6 above (Notification 78/2020-Central Tax, as amended), not a per-invoice limit of ₹5 lakh as some pages say. For the complete code table see SAC code for solar installation and the glossary on SAC code.

Pure service, composite supply or works contract

• Pure service (labour only). You bill installation to a customer or to another EPC. Rate: 18%.
• Composite supply. Goods and service are bundled and one is the principal supply. For solar, the notified 70:30 Explanation decides the split, not the general principal-supply rule. See composite supply.
• Works contract. A supply-and-install contract for a solar plant is the common EPC case. It is valued under the 70:30 Explanation and taxed at 8.9% effective.

Why residential versus commercial no longer sets the rate

Older pages, including earlier versions of this one, gave a 12% works-contract rate for residential projects and 18% for commercial. That structure does not describe the current notifications. Rate entries that used to give residential and government works contracts a lower rate were removed in 2022, and the residual 12% works contract entries moved to 18% on 22 September 2025. For solar, the rate follows the supply structure above. What still differs by customer is input tax credit: a GST-registered commercial buyer can generally claim the tax charged, and a household cannot.

How a government or PSU buyer's solar contract is taxed (through the 70:30 Explanation or as an ordinary works contract) is argued in rulings. Treat it as a question for your CA, not a rule.

Worked invoice examples

Both examples use the 70:30 view and are arithmetic only. Each needs your CA's confirmation of how the split is printed.

Example 1: 5 kW residential installation in Surat (DGVCL area)

Step	Value	Rate	GST
Deemed goods (70% of ₹2,80,000)	₹1,96,000	5%	₹9,800
Deemed service (30%)	₹84,000	18%	₹15,120
Total	₹2,80,000		₹24,920

Invoice total: ₹3,04,920. Effective rate 8.9%. The PM Surya Ghar subsidy goes to the beneficiary separately and does not reduce the taxable value. Check the current subsidy slabs on the PM Surya Ghar portal and see PM Surya Ghar subsidy slabs.

Example 2: 100 kW commercial installation in Pune (MSEDCL area)

Step	Value	Rate	GST
Deemed goods (70% of ₹35,00,000)	₹24,50,000	5%	₹1,22,500
Deemed service (30%)	₹10,50,000	18%	₹1,89,000
Total	₹35,00,000		₹3,11,500

Invoice total: ₹38,11,500. A registered business customer can generally claim the ₹3,11,500 as input tax credit, subject to the CGST Act, including section 17(5) on immovable property. For project sizes and costs, see 100 kW solar price.

Input tax credit for EPCs on installation-related inputs

The EPC's output here is taxable, so credit on inputs is available under the normal conditions. The practical issue is mix: batteries, structures and cables bought at 18% against a blended 8.9% output can accumulate credit. The GST Council's FAQ (Q51) says these goods "already faced inverted duty structure" and that a refund mechanism for inverted duty is available. Ask your CA how to claim it, and whether section 17(5) affects any of your inputs. See input tax credit.

Reverse charge on installation labour

We do not state a reverse-charge rule for buying labour from unregistered electricians. Reverse charge under section 9(4) applies only to notified classes of recipients, and the services under section 9(3) are the ones listed in Notification 13/2017. Whether your labour purchases fall under either is a question for your CA, and it is on the open list below.

The Works Contract Compliance Stack

A four-step routine for an EPC operations team:

1. Classify at intake. Goods only, labour only, or supply and install.
2. Confirm the structure on the quote. One contract means the 70:30 split. A labour-only job is 18%.
3. Show the deemed split on the invoice, with the BOM on the proposal.
4. Register and tax your sub-contractors correctly. Their labour to you is a service at 18%.

Common GST mistakes on installation invoices

• Billing goods at 12%. It has been 5% since 22 September 2025.
• Treating residential installation as a lower service rate.
• Ignoring the 70:30 rule on a supply-and-install contract.
• Printing 998714 or "9954 40" as the SAC.
• Bundling AMC into the EPC contract invoice instead of a separate agreement.

If you receive a GST notice

Keep the contract, the DISCOM application, the commissioning certificate and the invoice together, and take the notice to your CA. Do not assume a ruling from another state applies to you: an advance ruling binds the applicant and the concerned officer.

Open questions for your CA

• If goods and installation are billed on separate invoices under one contract, does the 70:30 Explanation still apply?
• Do batteries, structures and cables in the same contract fall inside the deemed 70%?
• How is a government or PSU buyer's contract taxed?
• What rate applies to a contract signed before 22 September 2025 and executed after?
• Does reverse charge apply to any labour you buy?

GST-correct quotes in QuickEstimate

Many invoice errors begin at the quote. QuickEstimate's quotation system applies 5% GST to solar goods and builds the BOM, labour and PM Surya Ghar subsidy lines in one place, and the proposal generator shows the GST breakdown on the PDF. See pricing. It supports the workflow; your CA decides how a contract is invoiced.

What to do this week

1. Re-check every open quote: goods at 5%, installation at 18%, bundled contracts at the 70:30 split.
2. Fix the SAC on your invoice template.
3. Take the open questions above to your CA in one sitting.

Sources

• PIB, Ministry of New and Renewable Energy: GST on renewable energy devices rationalised to 5%
• PIB: FAQs on the 56th GST Council (Q50, Q51)
• CBIC: Notifications 9/2025, 11/2017 (serial 38) and 15/2025 (Central Tax, Rate)

Frequently asked questions

What is the GST rate on solar installation service in India?

18% when installation is billed on its own as a service. When goods and installation are supplied together in one contract, 70% of the value is deemed goods at 5% and 30% is deemed service at 18%, which is an effective 8.9% since 22 September 2025.

What is the SAC code for solar installation?

The heading is 9954 (construction services), and 995461 (electrical installation services) is the 6-digit code most installers print. Serial 38 of Notification 11/2017 refers to headings 9954, 9983 and 9987. The number of digits on the invoice depends on turnover: 4 up to 5 crore rupees on B2B and 6 above. Confirm the code with your CA.

Is solar installation GST 18% or 8.9%?

18% is the service rate. 8.9% is the blended effective rate on a bundled supply of goods and installation under the 70:30 rule. You do not invoice at a single 8.9% rate: the split is 70% at 5% and 30% at 18%. Confirm the presentation with your CA.

Does the 70:30 rule apply if I raise separate invoices for goods and installation?

The Explanation applies where the notified solar goods are supplied along with other goods and services, including the serial 38 service. Whether separate invoices under one contract change that is an open question, so ask your CA before splitting.

Is GST on installation different for residential and commercial projects?

No. The service rate and the 70:30 split are the same. The difference is input tax credit: a GST-registered business customer can generally claim the tax charged, and a household cannot.

Does the PM Surya Ghar subsidy reduce the GST I charge?

The subsidy is paid to the beneficiary under the scheme, and the invoice is raised on the full contract value. Confirm the treatment for your state's payment flow with a CA, and check current subsidy slabs on the PM Surya Ghar portal.

Can an EPC claim input tax credit on materials and sub-contractor invoices?

The EPC's output is taxable, so credit is available on inputs under the usual conditions of the CGST Act. Where inputs at 18% exceed the tax on a blended output, the GST Council's FAQ says a refund mechanism for inverted duty is available. Section 17(5) on immovable property needs a CA's view.

Is AMC taxed the same as installation?

AMC and O&M are services at 18% under heading 9987, with 998719 commonly used. Keep them on a separate agreement and invoice from the EPC contract.

My contract was signed before 22 September 2025. Which rate applies?

The rate depends on the time of supply. Take the contract, invoice and payment dates to your CA. For reference, the same 70:30 split with goods at 12% was 13.8% effective before that date.