GST on Solar, Buyer's Complete Guide 2026

Goods and Services Tax (GST) is the single line item that confuses solar buyers more than any other. The headline number on a vendor quote, that bold “GST 18%” at the bottom of the invoice, is often wrong, sometimes by ₹25,000 on a residential system and by lakhs on a commercial one. The reality is that solar in India is not taxed at a single rate. Since 22 September 2025, panels and complete solar power generating systems carry 5%, inverters and balance-of-system items bought separately are commonly invoiced at 18%, and a bundled Engineering, Procurement and Construction (EPC) contract uses the 70:30 split to land at about 8.9%, provided the vendor structures the supply correctly.

This 2026 buyer guide explains the exact GST rate on each component, the mathematics behind the ~8.9% effective rate, how a commercial buyer recovers GST through Input Tax Credit (ITC), what a GST-compliant invoice must contain, the seven invoice errors we catch on third-party quotes, and how to verify GST on a quote before you pay. It is written for the buyer, residential homeowner under PM Suryaghar, commercial promoter with a Goods and Services Tax Identification Number (GSTIN), or a chartered accountant reviewing a solar quote on behalf of a client.

Direct answer. Since 22 September 2025, solar PV modules and cells (Harmonised System of Nomenclature [HSN] 8541) and complete solar power generating systems attract 5% GST, down from 12%. A bundled supply-and-install EPC contract uses the 70:30 deemed split, 70% of the value at 5% and 30% at 18%, an effective ~8.9%. Inverters, batteries and other components bought separately are commonly invoiced at 18%. Residential buyers under PM Suryaghar bear this as a real cost. Commercial buyers with a GSTIN claim full Input Tax Credit (ITC) against output GST, making the net solar GST cost zero. Verify the rate split, HSN codes, and e-invoice Quick Response (QR) code on every invoice before payment.

If you have already received a quote that bundles everything at a flat 18%, you are likely being overcharged by about ₹25,000 on a 5 kW residential system. If the quote does not show a GSTIN, HSN code, or split of Central GST (CGST) plus State GST (SGST), the document is not a valid tax invoice, and any ITC claim against it will be rejected during a Goods and Services Tax Return (GSTR) audit. This guide will give you the exact checks to run.

Why Solar GST Confused Buyers and What Changed in September 2025

Solar GST has changed more than once. Renewable energy devices started at a concessional 5% when GST launched, were later raised to 12%, and were cut back to 5% from 22 September 2025. Each change left some vendors quoting an old rate, and each of them could point to a notification they read selectively. Through 2023, 2024, and most of 2025, we saw residential customers across Jaipur, Ajmer, and Udaipur receive quotes with GST line items ranging from ₹18,000 to ₹38,000 on the same nominal 5 kW system, entirely because the vendor was applying a single flat rate rather than the legally correct component split.

The GST Council, at its 56th meeting on 3 September 2025, rationalised GST on the renewable energy value chain from 12% to 5% with effect from 22 September 2025. The Ministry of New and Renewable Energy (MNRE) release on PIB estimates that a typical 3 kW rooftop system became about ₹9,000 to ₹10,500 cheaper. The position in 2026 is: solar PV cells and modules (HSN 8541) and complete solar power generating systems carry 5%; inverters, batteries, mounting structures, cables and other components bought separately are commonly invoiced at 18%; and where a solar system is supplied and installed under a single rooftop EPC contract, the 70:30 deemed split applies, 70% of the gross contract value taxed as goods at 5% and 30% as services at 18%, an effective rate of approximately 8.9%.

This split is not a vendor choice. It is the specified treatment for solar contracts where goods and installation services are bundled. Any vendor charging a flat 18% on a residential bundled EPC contract is overbilling the customer. Any vendor still charging 12% on modules, or about 13.8% on a turnkey contract, is using the pre-22 September 2025 rate. Any vendor billing the whole turnkey contract at 5% is ignoring the service portion, which creates audit risk for the vendor and an invalid invoice for the buyer. The 2026 rate position is clean, what changes between buyers is the structure of the supply (bundled vs split), and whether the buyer can recover GST through ITC.

For residential buyers under PM Suryaghar, the GST is a sunk cost, there is no output tax against which to claim ITC. For commercial buyers with a registered GSTIN, the GST paid on the solar installation is recoverable as ITC against the GST charged on their business output, making the net GST burden on the solar project effectively zero over the recovery cycle. This single distinction, residential pays, commercial recovers, is the financial fulcrum of this guide. The rest of the document explains how to verify the rate is correct, how to ensure the invoice is ITC-eligible, and how to recover overpaid GST if you discover the error after payment.

The 5-Element GST Verification Checklist for Solar Buyers

We call this The 5-Element GST Verification Checklist for Solar Buyers: five fields on every quote and invoice that determine whether the tax treatment is legally correct, whether the document is ITC-eligible, and whether the buyer is being overcharged. Run all five before signing the quote, and again before paying the invoice. The five elements are: vendor GSTIN, HSN codes, applied rate, invoice format, and e-invoice QR. We developed this checklist after reviewing 1,400+ third-party solar quotes across Rajasthan during 2024 to 25, the failure rate on at least one element was 62%.

Element 1, Vendor GSTIN. The first line on a legitimate tax invoice must show the seller’s 15-digit GSTIN. The first two digits are the state code (08 for Rajasthan, 27 for Maharashtra, 24 for Gujarat). The next 10 digits are the seller’s PAN. The 13th digit is the entity code within the same PAN. The 14th is the alphabet Z. The 15th is a check digit. You can verify any GSTIN on the official GST portal, the search tool returns the legal name, registration status (Active/Cancelled/Suspended), and the principal place of business. If the GSTIN is missing, cancelled, or suspended, the document is not a valid tax invoice and no ITC can be claimed against it.

Element 2, HSN codes. Each line item must show the HSN code for the supplied good. Solar PV modules: HSN 8541. Solar inverters: HSN 8504. Mounting structures (steel/aluminium): HSN 7308. Solar cables: HSN 8544. Bidirectional net meter: HSN 9028. ACDB/DCDB combiner panels: HSN 8537. Service line items must use the Services Accounting Code (SAC): EPC installation is SAC 998319; annual maintenance contracts (AMC) are SAC 998719. A vague single HSN such as “8541, solar system” applied across the whole invoice is non-compliant and signals either negligence or deliberate rate manipulation.

Element 3, Applied rate. The applied GST rate must match the rates in force since 22 September 2025: modules and complete solar systems 5%; a supply-and-install contract split 70% at 5% and 30% at 18%; components bought separately commonly 18%. The total invoice GST on a typical turnkey rooftop project should reconcile to about 8.9% of the pre-tax contract value. A line that reads “Solar System, 5 kW, ₹2,80,000, GST 18%, ₹50,400” is structurally wrong; that same system on a compliant supply-and-install invoice should show GST of approximately ₹24,920.

Element 4, Invoice format. A valid tax invoice (per Rule 46 of the CGST Rules) must contain: invoice number and date; supplier name, address, GSTIN; recipient name, address, GSTIN (where registered); HSN/SAC against each item; quantity, unit, taxable value; rate and amount of CGST, SGST, or IGST (Integrated GST); place of supply (the recipient’s state); and signature or digital signature of the supplier. If the recipient is registered, their GSTIN must be on the invoice, without it, the recipient cannot claim ITC even if every other element is correct.

Element 5, E-invoice and QR code. Businesses with aggregate turnover above ₹5 crore must generate invoices through the Invoice Registration Portal (IRP), receive an Invoice Reference Number (IRN), and print a QR code on the invoice. By 2026, the threshold is firmly at ₹5 crore. A solar EPC vendor of any reasonable scale (we estimate >90% of branded vendors) will exceed this turnover and must e-invoice. If you receive an invoice without a QR code from a vendor whose turnover is above the threshold, the invoice is technically invalid and the ITC claim is exposed during audit. Heaven Green Energy e-invoices every customer regardless of value, the QR code on our invoice can be scanned on the e-invoice portal to validate the IRN in seconds.

For a full primer on reading solar paperwork including the GST section, line items, and warranty pages, refer to our how to read a solar quote guide. To compare quotes from different vendors with confidence, the solar decision tree for buyers gives you a structured filter.

Component-Wise GST Breakdown, Panel/Inverter/BoS/Structure

The component-wise GST table below is the 2026 reference for Indian solar rooftop projects, reflecting the rates in force since 22 September 2025. Verify each line against your vendor quote, any deviation should be flagged before signing.

Source: GST Council 56th meeting decisions and CGST rate notifications effective 22 September 2025; PIB, 17 September 2025.

Two things matter most in this table. First, the 5% rate covers modules, cells and complete solar power generating systems, so components supplied as part of a complete system follow the system rate rather than their own 18% headings. Second, the 70:30 split applies when the EPC vendor supplies and installs the system under one contract: 70% of the gross contract value is deemed goods at 5% and 30% is deemed services at 18%, which gives about 8.9%. Components bought separately, outside a complete system, are commonly invoiced at 18%, so a buyer who assembles a system from separately invoiced parts can end up paying more tax than on a turnkey contract.

For deeper context on how rate selection affects payback economics, particularly for commercial buyers also claiming Accelerated Depreciation, read our paired analyses on accelerated depreciation for solar tax and how to calculate solar ROI. Together with this GST guide, they form the complete tax-and-finance picture for a commercial solar buyer.

GST Math for a 5 kW Residential System

Let us walk through the exact GST mathematics on a 5 kW residential system priced at ₹2,80,000 (pre-GST), the most common rooftop size in JVVNL, JdVVNL, and AVVNL territories in 2026. When one vendor supplies and installs the system under a single contract, the 70:30 deemed split applies to the whole contract value. We will show the math so you can replicate it on any vendor quote.

The effective rate is about 8.9% (3.5% + 5.4%). If the vendor instead sells the complete system without installation, the whole value is at 5% and installation billed separately is at 18%. Either way, the buyer should expect to pay about ₹24,920 in GST on this turnkey 5 kW contract. If a vendor’s invoice shows GST of ₹50,400 (flat 18% on ₹2,80,000), the overcharge is ₹25,480. If it shows about ₹38,640, the vendor is still applying the pre-22 September 2025 rate of 12% on the goods portion, an overcharge of ₹13,720. Both are recoverable by asking the vendor for a revised invoice before payment.

A residential buyer claiming the PM Suryaghar subsidy of ₹78,000 for a 3 kW or larger system bears this GST as out-of-pocket, the MNRE subsidy is a fixed per-kW amount (₹30,000/kW for the first 2 kW, ₹18,000 for the third kW, capped at ₹78,000) and does not reimburse GST. The net cost of a 5 kW system to a residential homeowner therefore looks like: ₹3,04,920 (GST-inclusive contract) minus ₹78,000 (subsidy) = ₹2,26,920 net. Pay attention to the GST line, overpaying GST on this system costs you the equivalent of an extra month of grid bill savings, every year, for the life of the loan.

Get a GST-verified quote in 48 hours. Our engineers visit your site, run the BOM with line-level HSN codes, and send you a quote that shows the 70:30 GST split transparently, no flat 18% surprises. Get your free quote →

GST Math for a 100 kW Commercial System + ITC

A commercial buyer with a registered GSTIN reads the same GST math very differently. Where the residential buyer treats GST as a final cost, the commercial buyer treats GST as a recoverable cash flow, paid today, recovered as ITC against output GST within one monthly GSTR-3B cycle, with a net solar GST burden trending to zero. Let us walk the same math on a 100 kW commercial rooftop project priced at ₹50,00,000 pre-GST, supplied and installed under one EPC contract.

The ₹4,45,000 of GST paid is recovered in full in the GSTR-3B filed for the month in which the invoice is booked, subject to the vendor having filed GSTR-1 timely and the recipient GSTIN appearing on the invoice. From a cash-flow standpoint, the buyer parks ₹54.45 lakh against the contract, recovers ₹4.45 lakh against output GST within 30 to 45 days, and ends up with a net solar capex of ₹50 lakh. The ITC plus Accelerated Depreciation (AD) treatment stack together, see our accelerated depreciation guide for the full AD math, to give commercial buyers a 1.8 to 2.4-year payback in most industrial profiles.

For a quote that captures this commercial GST + AD math correctly, the vendor must (a) carry a valid GSTIN, (b) issue a Rule 46-compliant tax invoice, (c) file GSTR-1 in the month of supply so the invoice flows into the recipient’s GSTR-2B, and (d) split the BOM line items with correct HSN codes. Vendors who refuse to split the BOM, or who issue invoices late, are precisely the vendors who delay your ITC by a quarter, which on a ₹4.45 lakh GST cycle is meaningful working capital trapped. The red flags in a cheap solar quote guide names the specific behavioural markers that predict GST and ITC trouble downstream.

ITC (Input Tax Credit) for Commercial Buyers

ITC (Input Tax Credit) is the single most important concept for commercial solar buyers to understand. Get it right, and your solar GST burden is zero. Get it wrong, and you carry an unrecoverable ₹4+ lakh on every 100 kW project. The mechanics are governed by Section 16 and Section 17 of the Central Goods and Services Tax (CGST) Act 2017, Rule 36 and Rule 37 of the CGST Rules, and the auto-population logic of GSTR-2B (the recipient’s read-only credit statement).

The qualifying conditions for ITC on solar. Five conditions must hold simultaneously: (1) the buyer is registered under GST with an active GSTIN; (2) the buyer holds a valid Rule 46 tax invoice from the supplier; (3) the solar goods/services have been received (i.e., the system is delivered and commissioned); (4) the supplier has filed GSTR-1 reporting this invoice, so it auto-populates into the buyer’s GSTR-2B; and (5) the buyer has paid the supplier the invoice value (including GST) within 180 days of the invoice date, failure on this condition triggers ITC reversal under Rule 37 with interest. Most ITC denials we see in audits trace back to condition 4 (supplier did not file GSTR-1) or condition 2 (invoice was missing a mandatory Rule 46 field).

The use-case restriction under Section 17(5). ITC is denied on goods or services used for personal consumption, or for the construction of immovable property on the buyer’s own account (Section 17(5)(c) and 17(5)(d)). Solar rooftop systems installed on a commercial premises for captive consumption of taxable business output are eligible for ITC because the system is plant and machinery, not an addition to immovable property. CBIC has clarified this position through multiple advance rulings, the solar system is treated as plant and machinery (specifically excluded from the immovable property restriction under the Explanation to Section 17). If your auditor flags ITC on a captive solar system, point them to the captive-power-plant precedents and to the CBIC clarification under the GST policy wing.

The blocked-credit cases. ITC on solar is denied in three scenarios: (1) the buyer’s output supply is fully exempt from GST (e.g., a pure healthcare service provider has no output GST against which to claim credit); (2) the solar power is wholly consumed for personal use (residential under PM Suryaghar); (3) the system is sold under a Power Purchase Agreement (PPA) to a third party from a developer SPV, here the SPV’s output (electricity sale) is exempt from GST, so ITC is blocked under Section 17(2). Hybrid users (e.g., hospitals with both taxable pharmacy revenue and exempt healthcare revenue) apply a pro-rata Rule 42 reversal, typically claiming 25 to 40% of the solar GST as ITC.

The 180-day payment rule. Rule 37 requires the buyer to pay the full invoice value (including GST) to the supplier within 180 days. If not, the proportional ITC must be reversed in the next GSTR-3B with interest, and it can be re-availed once the payment is made. Solar EPC contracts often have 30 to 40% retention to be released after commissioning and net meter approval, these retentions can stretch beyond 180 days for slow DISCOMs, putting the buyer at ITC reversal risk. Best practice: align payment milestones to clear the full GST within 150 days, retaining only 5 to 10% beyond that window.

ITC claim process. Once the supplier’s invoice flows into your GSTR-2B (auto-generated on the 14th of every month), you book the credit in the GSTR-3B for that period. The credit reduces your output GST liability for the month, freeing cash. There is no separate “ITC application”, the GSTR-3B filing is itself the claim. The credit can be used to offset CGST, SGST, and IGST output, with the cross-utilisation rules in Section 49 of the CGST Act. For a 100 kW project with ₹4.45 lakh ITC, this typically clears the buyer’s output GST for one full month, a meaningful working capital relief.

For commercial buyers building a financial case for solar, our commercial solar services page walks through the full capex, GST, AD, and operational savings stack. The solar calculator will incorporate the ITC recovery into the net cost figure if you mark the project as commercial with a GSTIN.

Common GST Errors on Solar Invoices

Across the third-party quotes our team audits monthly for new customers, six GST errors recur with depressing reliability. Each one costs the buyer real money, sometimes the overcharge, sometimes the denied ITC, sometimes a downstream subsidy rejection. The list below is ordered by frequency observed during 2025.

1. 1
   Flat 18% applied across the whole invoice. The single most common error, the vendor copy-pastes a flat 18% line without splitting goods. On a ₹2,80,000 residential 5 kW system this overcharges by about ₹25,480. Ask for an invoice that applies the 70:30 split, 70% at 5% and 30% at 18%.
2. 2
   The old 12% rate, or 5% on the whole turnkey project. Some vendors still quote the pre-22 September 2025 rate of 12% on modules, which overcharges you. Others quote 5% on the whole supply-and-install contract to look cheap, then "discover" the 18% service portion at the invoice stage and add the gap as an extra cost. The correct turnkey position is the 70:30 split, about 8.9% overall.
3. 3
   Recipient GSTIN missing on commercial invoices. Without the buyer's GSTIN on the invoice, the commercial buyer cannot claim ITC. Vendors sometimes "forget" this on advance payment receipts, insist on the GSTIN being printed before any payment is made.
4. 4
   No e-invoice QR code from vendors above ₹5 cr turnover. Any vendor of meaningful scale must e-invoice. A missing QR code means the IRN was never generated, the invoice is technically invalid and ITC will not survive an audit. Scan every invoice QR on the official e-invoice portal.
5. 5
   Wrong HSN code or vague "solar system" description. A single HSN against a multi-item invoice is non-compliant. Each line needs its specific HSN. Vendors using "renewable energy device, HSN 8541" against the inverter (which is HSN 8504) are mis-classifying and exposing the buyer to audit risk.
6. 6
   CGST/SGST shown as a single combined line. Within-state supply must split CGST and SGST as separate line items (e.g., 2.5% + 2.5% = 5%). A single "GST 5%" line is non-compliant and creates GSTR-3B reconciliation issues. Inter-state supplies show a single IGST line, that is correct.
7. 7
   Place of supply mis-stated. The place of supply is the recipient's state. A Rajasthan buyer receiving a Maharashtra supplier's invoice should see Place of Supply: Rajasthan, with IGST charged. If CGST + SGST is charged instead (treating it as a Maharashtra-internal supply), the buyer cannot claim ITC in Rajasthan and must request a credit note + re-invoicing.

Residential GST vs Commercial GST Treatment

The structural divide between residential and commercial GST treatment shapes every aspect of how the buyer should think about the solar quote, the invoice, and the payback. The table below summarises both, then the pros/cons grid highlights what each buyer profile gains and loses under the 2026 GST regime.

Verdict. Both residential and commercial GST treatments are structurally clean in 2026, the rates are settled, the composite-supply blend is well-established, and the invoice rules are clear. What separates a good outcome from a bad one is not the rate; it is whether the vendor invoices correctly. A residential buyer with a flat-18% invoice overpays ₹25,000+ on a 5 kW system. A commercial buyer with a Rule 46 non-compliant invoice loses ₹4 lakh+ of ITC on a 100 kW project. The 5-Element Verification Checklist applied at the quote stage is the single most valuable check a buyer can run.

How Heaven Green Energy Ensures GST-Compliant Invoices

Heaven Green Energy is a GST-registered EPC company operating across Rajasthan, Gujarat, and Maharashtra, and every commercial invoice we issue carries the correct CGST/SGST or IGST treatment for the place of supply. Every invoice we issue is e-invoiced through the Invoice Registration Portal, the QR code on our invoice can be scanned and verified against the IRN registry within seconds. The compliance posture is deliberate: solar buyers we serve must never find their ITC claim rejected because of an invoice defect on our side.

Our invoicing process for every project follows seven internal checks before the invoice is released:

• HSN line-level split. Every BOM line carries its specific HSN, 8541 for panels, 8504 for inverters, 7308 for structure, 8544 for cables, 8537 for ACDB/DCDB, 9028 for net meters, and SAC 998319 for installation labour. No single-HSN consolidations.
• Rate compliance per line. Modules and complete systems at 5%, turnkey supply-and-install contracts under the 70:30 split (70% at 5%, 30% at 18%), and separately sold components at their own rates, in line with the rates in force since 22 September 2025.
• Recipient GSTIN capture. For commercial customers, we record and print the recipient GSTIN on every advance receipt, progress invoice, and final invoice. No invoice goes out without it.
• E-invoice IRN + QR. Every invoice carries an IRN issued by the IRP and the QR code printed on the document for buyer scan-and-verify.
• GSTR-1 timely filing. We file GSTR-1 by the 11th of the following month, so the buyer’s GSTR-2B auto-populates with our invoices in time for their GSTR-3B.
• Rule 46 field completeness. Every mandatory Rule 46 field is on the invoice, supplier details, recipient details, HSN, taxable value, rate, amount of tax, place of supply, signature.
• Audit-ready archives. We maintain 7-year archives of all invoices, BOMs, and e-invoice IRNs, accessible to customers and their auditors on request.

For buyers comparing solar quotes, our quote document explicitly carries the GST split, the 70% goods portion at 5% and the 30% services portion at 18%, with the effective rate computed and shown at the bottom of the page. You see the math before you sign. Explore the right service for your project:

• Residential Solar: PM Suryaghar end-to-end with GST-compliant invoicing for clean subsidy submission.
• Commercial Solar: 10 to 100 kW with ITC-ready invoices and Accelerated Depreciation paperwork.
• Channel Partner: for solar resellers needing compliant GST flow into their own customer invoices.
• Solar Calculator: incorporates GST + ITC + AD recovery in the net cost figure.

For background context on related guides, see our older GST on solar reference article, the accelerated depreciation guide, and the how to calculate solar ROI walkthrough. Together, they give you the complete tax-and-finance picture for any solar project size from 3 kW to 1 MW. To engage with our team for a GST-verified quote on your project, contact us and a solar advisor will respond within 2 hours on business days.

Frequently Asked Questions

What is the GST rate on a solar rooftop EPC contract in India in 2026?

A bundled supply-and-install solar rooftop EPC contract in India in 2026 attracts an effective GST rate of approximately 8.9% under the 70:30 deemed split for works contracts. 70% of the gross contract value is treated as the supply of goods at 5% (the rate on solar modules and complete solar power generating systems since 22 September 2025), and 30% as the supply of services at 18%. A complete system sold without installation is at 5%. Inverters, batteries and other components bought separately are commonly invoiced at 18%.

Can a commercial buyer recover GST paid on a solar installation?

Yes. A commercial buyer with a registered GSTIN can claim full Input Tax Credit (ITC) on the GST paid on a solar installation, recovering the entire GST amount against the buyer’s output GST liability in the GSTR-3B for the relevant month. The net GST cost on the solar project trends to zero. Five conditions must be met: active GSTIN, valid Rule 46 tax invoice, system received and commissioned, supplier filed GSTR-1, and full invoice payment within 180 days. Most commercial buyers recover the GST within 30 to 45 days of booking the invoice.

Why is my solar vendor charging 18% GST instead of about 8.9%?

The most common reason is that the vendor is applying a flat 18% rate to the whole contract. This is incorrect for a supply-and-install solar contract, which uses the 70:30 split: 70% at 5% and 30% at 18%. Since 22 September 2025, solar PV modules (HSN 8541) and complete solar power generating systems attract 5%. Ask for a revised invoice that applies the split. On a ₹2,80,000 residential 5 kW contract, the GST should be about ₹24,920, not the ₹50,400 that a flat 18% would generate. If the GST is around ₹38,640, the vendor is still using the old 12% rate. The overcharge is recoverable by requesting a revised invoice before payment.

Does PM Suryaghar subsidy cover the GST on residential solar?

No. The PM Suryaghar Central Financial Assistance is a fixed per-kW amount, ₹30,000/kW for the first 2 kW and ₹18,000 for the third kW, capped at ₹78,000, and does not reimburse GST. At the 8.9% effective rate on a turnkey contract, GST on a 3 kW system priced around ₹1.5 lakh to ₹1.8 lakh is roughly ₹13,000 to ₹16,000, all of which is borne by the homeowner. The subsidy is credited to the homeowner’s bank account via Direct Benefit Transfer after net meter commissioning; it offsets the system price but not the tax. Plan for both the system cost and the GST cost separately when budgeting for a PM Suryaghar installation.

What HSN code should appear on my solar panel invoice?

Solar PV modules must carry HSN 8541 on the invoice. Solar string inverters carry HSN 8504. Mounting structure carries 7308. DC cables carry 8544. ACDB/DCDB combiner panels carry 8537. Bidirectional net meters carry 9028. Installation services (EPC) carry SAC 998319. A vague single HSN such as “solar system, 8541” applied across the entire invoice is non-compliant and should be corrected. The correct HSN against each line is the difference between an audit-survivable invoice and one that triggers a rate-classification notice from the GST department.

How do I verify the vendor’s GSTIN on a solar invoice?

Visit the official GST portal and use the “Search Taxpayer” feature. Enter the 15-digit GSTIN from the invoice, the portal returns the supplier’s legal name, registered address, registration status (Active, Cancelled, or Suspended), and date of registration. Cross-check this against the invoice header. A suspended or cancelled GSTIN means the invoice is not a valid tax document, and ITC against it will be denied. We recommend GSTIN verification before every advance payment, not just before final settlement, vendor GSTINs can be suspended mid-contract for non-compliance, and you want to catch that early.

Is an e-invoice mandatory for solar EPC vendors in 2026?

Yes, for any solar EPC vendor with aggregate annual turnover above ₹5 crore in any year from 2017 to 18 onward, e-invoicing through the Invoice Registration Portal (IRP) is mandatory. The vendor must obtain an Invoice Reference Number (IRN) and print the QR code on the invoice. Most branded solar EPC companies clear the ₹5 crore threshold. If your vendor’s invoice does not show a QR code, either the vendor is below the threshold (verify their turnover) or the invoice is non-compliant. Scan every QR on the e-invoice portal to confirm the IRN is registered.

What happens to my ITC claim if I do not pay the solar vendor within 180 days?

Rule 37 of the CGST Rules requires the recipient to pay the supplier the full invoice value (including GST) within 180 days of the invoice date. If you do not, the proportional ITC must be reversed in the next GSTR-3B with interest. For solar EPC contracts with 30 to 40% retention against commissioning, this is a real risk. Best practice is to structure payment milestones so the GST component clears within 150 days, retaining only a small performance hold (5 to 10%) beyond that window. Once you pay the retention, you can reclaim the reversed ITC in the GSTR-3B for that month.