GST on Solar Systems in India: Rates by Supply Type

GST on a complete solar system in India is 8.9% effective when one supplier sells the goods and installs them, and the rate is the same for a home and a factory. Since 22 September 2025, solar panels and other notified solar devices carry 5% GST, installation carries 18%, and the notification deems a contract to be 70% goods and 30% service. Before that date the same arithmetic gave 13.8%.

This page is the umbrella for the solar GST cluster. It explains which rate applies to which supply, shows the 70:30 arithmetic, and points to the page that owns each detail: HSN codes and rates by component, inverters, installation services and SAC codes.

GST on solar at a glance

What you supply	GST	Where to read more
Solar panels and cells, notified solar devices	5%	HSN codes and GST rates for solar
Complete system with installation, one contract	8.9% effective (5% on 70%, 18% on 30%)	This page
Installation service billed on its own	18%	GST on solar installation
Inverter sold alone	18% on the conservative reading; 5% arguable	Solar inverter GST
Battery, cable, structure sold alone	18%	HSN codes and GST rates for solar
AMC and O&M	18%	Solar AMC pricing

What changed on 22 September 2025, and which notifications say so

The 56th GST Council meeting of 3 September 2025 cut the rate on renewable energy devices from 12% to 5%. The Council's FAQ says the rate on renewable energy equipment that was at 12% "has been reduced to 5%". The PIB release from the Ministry of New and Renewable Energy says the revised rates took effect on 22 September 2025 and puts the saving on a typical 3 kW rooftop system at about ₹9,000 to ₹10,500.

The legal text sits in three places.

Instrument	What it does
Notification 9/2025 Integrated Tax (Rate) and Central Tax (Rate), 17 Sep 2025, Schedule I entry 437	Puts solar power-based devices, the solar power generator and photovoltaic cells (assembled in modules or not) at 5%, and carries the 70:30 Explanation
Notification 11/2017 Central Tax (Rate), serial 38	The service of construction, engineering, installation or other technical work for setting up solar power-based devices and solar power generating systems (headings 9954, 9983, 9987), at 9% central tax plus 9% State tax, or 18% integrated tax, so 18% in total. Inserted by Notifications 27/2018 and 28/2018, in force 1 Jan 2019; we found no later change to the rate column (CBIC list checked 31 Oct 2026)
Notification 15/2025 Central Tax (Rate), 17 Sep 2025	Rewrites the Explanation to serial 38 so it reads with entry 437

The notifications are on the CBIC GST rates page.

Composite supply, and why the 70:30 rule overrides it for solar

Under GST, a composite supply is a bundle of goods and services where one is the principal supply and the bundle takes the principal supply's rate (see our glossary on composite supply). That general rule is not what decides a solar contract. The Explanation under entry 437 is specific: if the notified solar goods are supplied along with other goods and services, one of which is the serial 38 service, the value of the goods is deemed to be 70% of the gross consideration and the remaining 30% is deemed to be the value of the service.

So the answer is not "the whole contract at 5%" and not "the whole contract at 18%". It is two taxable values at two rates.

The Solar GST Decision Tree

Run any project through these questions in order.

1. Are you selling goods only? Panels and cells are 5%. Batteries, cables and structures sold alone are 18%. A standalone inverter is a classification question, see the inverter guide.
2. Are you selling installation labour only? That is a service at 18%, under the headings in serial 38.
3. Are you supplying a solar system and installing it under one contract? Use the 70:30 split: 70% of the gross consideration at 5%, 30% at 18%.
4. Is the customer a home or a business? It does not change the rate. It changes input tax credit: a registered business can claim it, a household cannot.
5. Is anything on the invoice not covered above (a battery, a mounting-only contract, a government buyer)? Take it to your CA with the contract.

GST rates by component

Component	HSN or SAC	Sold alone	In a supply-and-install contract
Solar module	8541 43 00	5%	In the deemed 70% goods value
Solar cell	8541 42 00	5%	In the deemed 70% goods value
Inverter	8504 40	18% conservative; 5% arguable	In the deemed 70% goods value
Battery (lithium, lead-acid)	8507	18%	CA question
Mounting structure	7308, 7610	18%	CA question
DC and AC cable	8544	18%	CA question
Installation	SAC 9954 heading (995461 common)	18%	The deemed 30% service
AMC and O&M	SAC 9987 heading	18%	Separate agreement

Whether battery, cable and structure lines inside the same contract belong to the deemed 70% is not answered in the notification text, which is why the cell says "CA question".

How the 70:30 rule works: a 3 kW example

Take a ₹1,85,000 gross contract to supply and install a 3 kW rooftop system.

Step	Value	Rate	GST
Deemed goods (70% of ₹1,85,000)	₹1,29,500	5%	₹6,475
Deemed service (30%)	₹55,500	18%	₹9,990
Total	₹1,85,000		₹16,465

The invoice total is ₹2,01,465 and the blended rate is 8.9%. Before 22 September 2025 the goods leg would have been 12%: ₹15,540 plus ₹9,990 is ₹25,530, or 13.8%. On this contract the rate cut is worth ₹9,065. The arithmetic is ours on the notified rates. How the split should be printed on the invoice is a point to confirm with your CA.

The old story: residential at 5%, commercial at 12%

Many pages, including earlier versions of ours, told readers that a residential supply took one rate and a commercial supply another. That is not how the rate works. The rate follows the supply structure: goods, service, or the 70:30 contract. The residential or commercial status of the buyer affects input tax credit, not the rate. Contracts that straddle 22 September 2025 depend on the time of supply, so take them to your CA.

Input tax credit for EPCs and business buyers

A GST-registered business that buys a solar system for its own taxable use can generally claim credit on the tax charged, subject to the CGST Act's conditions, including the section 17(5) restriction on certain immovable property. A household is not registered and cannot claim.

For the EPC, the output is taxable. The Council's FAQ (Q51) states that the goods "already faced inverted duty structure", that the 5% rate deepens it, and that a refund mechanism for inverted duty is available. If you buy batteries, structures and cables at 18% and sell at a blended 8.9%, ask your CA whether credit is accumulating. See also input tax credit.

Invoice format: what a solar GST invoice must show

A tax invoice must carry the supplier's and recipient's details, the invoice number and date, the description of goods and services, HSN or SAC, quantity and value, the tax rate and amount, and the place of supply (Rule 46 of the CGST Rules). Printing HSN: 4 digits up to ₹5 crore turnover on B2B invoices and 6 above (Notification 78/2020-Central Tax, as amended). E-invoicing applies to businesses above ₹5 crore aggregate turnover (Notification 10/2023-Central Tax, from 1 August 2023); check your obligation with your CA (see e-invoice and when e-invoicing applies to a solar business).

For a supply-and-install contract, show the deemed split clearly so the customer can see 70% at 5% and 30% at 18%, and keep the BOM on the proposal. Your CA should confirm the presentation.

GST and PM Surya Ghar projects

Under PM Surya Ghar Muft Bijli Yojana, the central subsidy is capped at ₹78,000 for residential systems of 3 kW and above (confirm the current slabs on the portal; they can change). The subsidy goes to the beneficiary through the scheme, not to the EPC. Invoice the full contract value. Do not show the subsidy as a discount and tax only the customer's out-of-pocket share. If a state routes any payment through the DISCOM to the installer, take the treatment to your CA. For amounts by size, see PM Surya Ghar subsidy slabs and cost by system size.

Open questions to take to your CA

• Does the deemed 70% goods value include batteries, cables and structures supplied in the same contract?
• Is a standalone inverter 5% or 18% in your supply?
• How does a government or PSU buyer's contract get taxed, and does the 70:30 Explanation apply?
• If goods and installation are on separate invoices, does the Explanation still apply?
• Which rate applies to a contract signed before 22 September 2025 and delivered after?

Common GST mistakes on solar projects

• Billing the goods leg at 12%. It has been 5% since 22 September 2025.
• Using one flat rate for the whole contract.
• Treating residential and commercial as different rates.
• Putting batteries, cables or structures on a "solar system" line at 5% without a view from your CA.
• Bundling AMC into the EPC invoice instead of a separate agreement.
• Printing the wrong SAC.

Keeping GST consistent across proposals

Wrong GST usually starts at the quote. QuickEstimate's quotation system lets you keep proposal templates with your logo, items, product photos and terms, and apply the PM Surya Ghar subsidy in the proposal. The proposal generator turns it into a PDF you can share on WhatsApp. You set the tax lines and wording, and your CA's view decides how a mixed contract is invoiced. See pricing for plans.

What to do this week

1. Re-check every open quote against 5% on goods, 18% on services and the 70:30 split.
2. Update your proposal and invoice templates so the rate and HSN printed match.
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 decisions of the 56th GST Council (Q50, Q51)
• CBIC: Notification 9/2025 (Rate), 11/2017 serial 38 (as inserted by 27/2018 and 28/2018) and 15/2025 (Central Tax, Rate)

Frequently asked questions

What is the GST rate on a complete solar system in India?

When goods and installation are supplied together, 70% of the contract value is treated as goods taxed at 5% and 30% as a service taxed at 18%. That is about 8.9% effective since 22 September 2025. It was about 13.8% before, when goods were at 12%.

What is the GST rate on solar panels?

5% from 22 September 2025, down from 12%, under Schedule I entry 437 of Notification 9/2025. The HSN code for an assembled module is 8541 43 00. Component-level codes and rates are on our HSN code guide.

What is the GST on solar installation?

18% when installation is billed on its own as a service. Inside a supply-and-install contract it is the 30% service leg of the 70:30 split, also taxed at 18%.

How does the 70:30 rule work, with an example?

On a 1,85,000 rupee contract, 1,29,500 rupees is deemed goods at 5%, which is 6,475 rupees, and 55,500 rupees is deemed service at 18%, which is 9,990 rupees. GST is 16,465 rupees, or 8.9%, and the invoice total is 2,01,465 rupees. Confirm the invoice presentation with a CA.

Is GST different for residential and commercial solar systems?

No. The rate and the 70:30 split are the same. A GST-registered business can claim the tax as input tax credit subject to the CGST Act. A household cannot.

What GST applies to inverters, batteries and structures sold separately?

Batteries (8507), structures (7308 or 7610) and cables (8544) sold separately are in Schedule II at 18%. A standalone inverter (8504) is 18% on the conservative reading and 5% arguable. Inside a contract, treatment of these items is a question for your CA.

Is GST charged on the PM Surya Ghar subsidy?

The subsidy is a government transfer to the beneficiary and not a supply by the EPC. The invoice is raised on the full contract value. Confirm treatment for your state's payment flow with a CA, and check current slabs on the PM Surya Ghar portal.

Can an EPC claim input tax credit on solar equipment?

Where the output is taxable, credit is available on inputs under the usual conditions of the CGST Act. If inputs at 18% exceed the tax on a blended output, credit can accumulate, and the GST Council's FAQ says a refund mechanism for inverted duty is available. Ask your CA how to claim it.

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

The rate depends on the time of supply, which turns on invoice, payment and delivery dates. Take the contract and the dates to your CA before you invoice.