GST Rate on Solar Inverters in India 2026

Every EPC invoice that gets the GST rate wrong on an inverter creates two problems. First, a mismatch in your GSTR-1 that can trigger a GST notice. Second, a wrongly priced proposal that either shrinks your margin or makes your quote look expensive to the customer. In a ₹40–80 lakh per month EPC business, even a 5% GST error on inverters can mean ₹2–4 lakh of unnecessary tax exposure per quarter.

This guide cuts through the confusion. It covers the correct HSN code and GST rate for every type of solar inverter sold in India in 2026, string, micro, hybrid, battery, and PCU, along with ITC (Input Tax Credit) rules for residential and commercial installations, invoice structuring best practices, and how QuickEstimate's quotation system automatically applies the right GST so your proposals are always compliant.

India's GST framework for solar equipment has gone through several revisions since 2017, and most EPC businesses are still working from outdated information. The complete guide to GST on solar systems in India covers the full picture, this post zooms in on inverters specifically, because that is where most invoicing errors happen.

Why inverter GST classification is confusing for EPCs

Solar inverters sit at the intersection of two product categories in GST law. They are electrical machinery (Chapter 85 of the Customs Tariff Act) and, in some configurations, energy storage equipment. The Central Board of Indirect Taxes and Customs (CBIC) resolved most of the ambiguity in 2021 when it revised the schedule of concessional rates for renewable energy devices.

Before 2021, EPCs used a mix of HSN codes, some invoiced inverters under 8504, others under 8507 (batteries), and some under the generic 85 heading. This created ITC mismatches and resulted in GST notices for dozens of EPCs in Gujarat, Rajasthan, and Maharashtra.

The core issue is that different inverter types serve different functions:

• A string inverter purely converts DC to AC. It is a power conditioning unit.
• A hybrid inverter converts DC to AC AND manages battery charging. It bridges two HSN chapters.
• A PCU (Power Conditioning Unit) combines charge controller, inverter, and sometimes battery management. It may attract different rates depending on how it is invoiced.
• A battery inverter (retrofit inverter for existing battery banks) has no solar input and is classified differently.

Getting these distinctions right is not optional. The GST Portal cross-references HSN codes with your filed returns, and mismatches trigger automated scrutiny notices under Section 61 of the CGST Act.

HSN codes and GST rates for every inverter type

The table below is the definitive reference for Indian EPCs in 2026. Every rate is drawn from CBIC Notification No. 08/2021-CT(Rate), which amended the original 2017 schedule, and confirmed by the Ministry of New and Renewable Energy (MNRE) clarification circular dated March 2022.

GST rate history, pre and post the 2021 revision

Understanding where GST rates on inverters came from helps you defend your classification if you face scrutiny for invoices issued before 2022. Here is the timeline, sourced from CBIC notifications:

The rate change from 5% to 12% in October 2021 caught many EPCs off-guard. Businesses that had quoted projects in August–September 2021 using 5% GST suddenly had to absorb a 7% increase mid-project. This is why your proposals must always clearly state the GST rate as of the date of supply, not the date of quote.

For more detail on how this rate change affected solar panels too, see the comprehensive guide to GST on solar panels.

ITC claim eligibility: residential vs commercial

Input Tax Credit (ITC) rules for solar inverters differ sharply depending on whether the project is residential or commercial. This is one of the most common compliance mistakes EPCs make in India, and the consequences range from demand notices to penalty orders.

Residential installations (PM Surya Ghar and general rooftop)

If your customer is a household installing a rooftop solar system, whether under PM Surya Ghar Muft Bijli Yojana or privately, they are end consumers. They cannot claim ITC on the inverter GST they pay you. As the EPC, you charge 12% GST and deposit it. That is the end of the ITC chain.

If your EPC is a registered dealer and you purchase inverters from a distributor, you can claim ITC on the GST you paid on that purchase, but only if the inverter is used in a taxable commercial supply. If you install it in a residential project where your supply is exempt or zero-rated, you must reverse the ITC under Rule 42 of the CGST Rules.

Commercial and industrial installations

For commercial rooftop (C&I) projects, factories, hospitals, schools, commercial buildings, the situation is more favourable:

• Your commercial customer is likely GST-registered.
• They can claim ITC on the 12% GST paid on the inverter, provided the solar system is used for their taxable business output.
• If the business has both taxable and exempt outputs (e.g., a hospital with both private and government-funded services), ITC must be apportioned under Rule 42.

ITC for the EPC itself

As an EPC, your ITC on inverter purchases (inward supply) can be set off against the GST you collect from customers (outward supply). This is why correct classification matters for your own cash flow, if you classify your outward supply incorrectly, your GSTR-1 and GSTR-3B will mismatch, blocking your ITC set-off.

IGST on imported inverters

A significant share of solar inverters sold in India, Growatt, Solis, Huawei, Sungrow, are imported from China. For EPCs importing directly or buying from an importer-distributor, the GST picture includes both customs duty and Input Tax Credit on IGST.

The customs classification for solar inverters is the same HSN 8504 40. Customs duty on solar inverters is governed by CBIC Customs Notification 24/2005 which provides a concessional 5% BCD on solar energy-related equipment. IGST on import is charged at the same 12% domestic rate.

The ITC on the IGST paid at import can be used to offset your domestic GST liability, which is a significant cash flow advantage for EPCs who import directly. However, you must clear the IGST at the port of entry, so plan your working capital accordingly.

The Inverter Tax Clarity Framework, for EPC compliance teams

If you are Priya managing GST compliance for a 40-person EPC in Pune, you need a repeatable process to classify every inverter in every purchase order correctly. Here is the Inverter Tax Clarity Framework, four questions your ops team should answer before every invoice.

1. 1

   Does this inverter have a solar PV input?

   Yes → HSN 8504 40, 12% GST. No (pure battery/UPS inverter) → HSN 8507, 18% GST. This single question resolves 80% of classification decisions.

2. 2

   Is it a hybrid (solar + battery) or pure on-grid/off-grid?

   Hybrid inverter → still HSN 8504 40 at 12%. Invoice the battery bank separately under HSN 8507 at 18%. Never bundle them in one line item at a blended rate.

3. 3

   Is this a supply of goods or a works contract?

   If you supply the inverter as goods only (no installation), the above rates apply. If installation is included, it becomes a composite supply or works contract, read the GST on solar installation services guide for the correct SAC code and rate for the service portion.

4. 4

   Is your customer GST-registered and eligible to claim ITC?

   Residential customer → ITC chain ends at your supply. Commercial/industrial customer → ensure the tax invoice has the correct HSN, GSTIN, and split line items so their ITC claim is not blocked.

Common GST mistakes EPCs make on inverter invoices

These are the mistakes that generate GST notices most frequently, based on audit observations from EPCs in Surat, Ahmedabad, Pune, and Bengaluru.

How to structure a compliant solar inverter invoice

A tax invoice for a solar inverter supply (goods only, not a works contract) must include the following fields under Section 31 of the CGST Act and Rule 46 of the CGST Rules. Here is a practical example for a 5 kW residential project in Surat:

Invoice line items for a 5 kW on-grid solar system:

Line	Description	HSN	Qty	Rate	Value	GST %	GST Amt
1	Solar PV Modules 400Wp (x13)	8541 43	13	₹14,500	₹1,88,500	12%	₹22,620
2	String Inverter 5kW (Growatt MIN5000TL-X)	850440	1	₹28,000	₹28,000	12%	₹3,360
3	Mounting Structure (Aluminium)	7610	1 set	₹12,000	₹12,000	18%	₹2,160
4	AC/DC Cables & Accessories	8544	1 lot	₹8,000	₹8,000	18%	₹1,440
Total					₹2,36,500		₹29,580

Note that the installation service (labour) is a separate line item in a works contract scenario. See the detailed treatment in the GST on solar installation services guide, which covers SAC 9954 and the 12%/18% works contract distinction.

GST on inverters for different project types

Your GST compliance obligations also vary based on the project category. This matters for how you structure your GSTR-1 and handle ITC.

Residential rooftop (PM Surya Ghar): You supply and install. The inverter is supplied at 12% GST. Installation service, if separately invoiced, is at 12% SAC 9954. For PM Surya Ghar empanelled vendors, the DISCOM (Distribution Company) reimburses the subsidy portion directly, but GST is still charged on the full pre-subsidy invoice value.

Commercial rooftop (C&I): Same 12% on the inverter. Your commercial customer claims full ITC. Your EPC also gets ITC on your input purchases. Most profitable from a GST cash-flow perspective.

Government projects (schools, hospitals, panchayat bhavans): Government departments are exempt from paying GST under certain categories. Check whether your contract specifies a works contract with an exemption under Notification 12/2017-CT(Rate) Entry 3. If it is a pure government infrastructure project, RCM (Reverse Charge Mechanism) may apply, consult your CA before invoicing a government body for solar.

Utility-scale ground mount: Central inverters at utility scale follow the same 12% HSN 8504 40 classification. Procurement contracts for utility-scale projects often involve advance payments and milestone-based invoicing, ensure each invoice shows the correct HSN at the time of supply, not at the time of advance receipt.

How QuickEstimate fits into your GST compliance workflow

Managing GST classifications manually across 40–60 proposals per month creates real risk. Rohit's team in Surat was doing just that, each sales rep copying a different invoice template, some using old 5% rates, some bundling line items differently. When their CA flagged the GSTR-1 mismatches in Q3 2024, they had to amend 18 invoices across two quarters.

QuickEstimate solves this at the proposal stage, before a quote becomes an invoice.

• Quotation System, pre-configured HSN codes and GST rates for every solar component including inverters (850440 at 12%), batteries (8507 at 18%), and mounting structures (18%), so every proposal already has the correct line-item tax breakdown.
• Proposal Generator, generates a branded PDF proposal with itemised GST amounts, subsidy deduction, and final customer payable, all calculated automatically, no manual entry.
• Pipeline Management, track which proposals have been accepted and convert them to tax invoices with one tap, preserving the correct HSN and GST from the proposal stage through to billing.
• Sales Reports, see GST collected by project type, product category, and month, giving your CA the reconciliation data they need for GSTR-1 filing without a manual audit.

The result: your sales boys in the field send compliant proposals from their phones. Your ops lead gets one clean dashboard. And your CA does not spend half a day every month hunting down invoice corrections.

What to do this week, for your EPC

Three actions that reduce your GST audit risk on inverter invoices immediately:

1. 1

   Audit your last 12 inverter invoices

   Check every invoice for correct HSN (850440 for solar inverters, 8507 for battery-only), correct GST rate (12%), and separate line items for batteries and mounting. Flag any that show the old 5% or a blended rate, and consult your CA about amended returns if needed.

2. 2

   Update your invoice template with correct HSN 850440

   If you are above ₹5 crore turnover, the 6-digit HSN is mandatory. Update every product line in your invoicing software or ERP. If you use QuickEstimate, the quotation system already has this configured, all you need to do is verify the product catalogue matches your current stock.

3. 3

   Brief your sales team on what they can and cannot promise on ITC

   Sales reps often tell residential customers they can claim ITC, which is incorrect. Train them on the residential vs commercial distinction. For your commercial pipeline, make ITC benefit a selling point: at ₹8 lakh inverter cost, the commercial customer effectively saves ₹96,000 through ITC recovery.

For a deeper dive into how your overall solar business capital and tax structure should look, read the guide on how much capital to start a solar business in India. For building a sales pipeline that converts correctly and tracks GST compliance from proposal stage, see the solar sales funnel guide for India.

Ready to put correct GST into every proposal automatically? Start free on QuickEstimate, 10 proposals/month at no cost, no card needed.

Frequently asked questions

What is the GST rate on solar inverters in India in 2026?

Solar inverters in India attract 12% GST in 2026 under HSN code 850440 (static converters), as per CBIC Notification No. 08/2021-CT(Rate) effective 1 October 2021. This rate applies to string inverters, micro-inverters, hybrid inverters, off-grid inverters, and Power Conditioning Units (PCUs) when used as part of a solar PV system. Battery-only inverters without a solar input are classified under HSN 8507 and attract 18% GST.

What is the HSN code for solar inverters in India?

The correct HSN code for solar inverters is 850440 (6-digit) or 8504 40 (with space notation). This falls under Chapter 85 of the Customs Tariff Act, Electrical Machinery and Equipment. For businesses with annual turnover above ₹5 crore, the 6-digit HSN is mandatory on every tax invoice. Businesses below ₹5 crore can use the 4-digit heading 8504.

Can I claim ITC on the GST paid on a solar inverter?

It depends on the project type. If you are an EPC purchasing inverters for installation in commercial or industrial projects, you can claim ITC on the 12% GST paid, provided those projects involve taxable outward supply. If the inverter is installed in a residential project under PM Surya Ghar or a general residential rooftop, and the residential supply is exempt or zero-rated, you must reverse the ITC under Rule 42 of the CGST Rules. Residential end consumers cannot claim ITC at all.

How should I invoice a hybrid inverter, at 12% or 18%?

Invoice the hybrid inverter unit itself under HSN 850440 at 12% GST, since its primary function is solar DC to AC conversion. The battery bank connected to it should be invoiced separately under HSN 8507 at 18% GST. Never combine the inverter and battery in a single blended-rate line item, this is a common GST audit trigger. Keep separate line items with separate HSN codes.

What GST rate applied to solar inverters before October 2021?

Before 1 October 2021, solar inverters were covered under the broader renewable energy device schedule at 5% GST (CBIC Notification 01/2017-IT(Rate), Entry 234). The rate was revised upward to 12% under Notification 08/2021-CT(Rate). If your business issued invoices between the new rate announcement (late September 2021) and the effective date (1 October 2021) at 5%, consult your CA regarding any amendment requirements.

Does GST on imported solar inverters differ from domestic supply?

The GST rate on imported solar inverters is the same 12% IGST, applied under the same HSN 850440 classification. In addition to IGST, imports attract Basic Customs Duty (BCD) at 5% for solar energy equipment (CBIC Customs Notification 24/2005) and Social Welfare Surcharge. The IGST paid on import is creditable as ITC, which can be offset against domestic GST liability.

Do government solar projects attract GST on inverters?

Yes, inverter supply to government projects attracts 12% GST on the goods portion. However, if the project involves a works contract with a government body, certain exemptions under Notification 12/2017-CT(Rate) may apply to the service component. For pure goods supply (inverter only, no installation), 12% GST applies regardless of whether the buyer is a government department. Verify with your CA whether Reverse Charge Mechanism (RCM) applies for your specific government contract.

What happens if my GST officer disputes my HSN 850440 classification?

Advance Ruling under Section 97 of the CGST Act allows you to seek a binding ruling from the Authority for Advance Ruling (AAR) in your state. Several AARs, including Gujarat AAR and Maharashtra AAR, have already ruled in favour of solar inverters being classified under 8504 (power conditioning equipment) at 12%. Maintain your supplier's invoice, the product technical data sheet, and the CBIC notification as documentary support.