Goods and Services Tax (GST) on solar in India has been a moving target for buyers and finance teams since the July 2022 Council revision. By 2026, the rate structure has settled — but the confusion has not. EPC contractors still issue invoices at the wrong rate, residential customers still get overcharged at a flat 18%, and commercial buyers still miss Input Tax Credit (ITC) on Balance of System (BoS) lines because the Harmonised System of Nomenclature (HSN) codes are wrong. This guide is the definitive 2026 rate reference: every HSN code that touches a solar project, every rate, the effective blended rate, and the residential vs commercial treatment side by side.
Direct answer. As of 2026, solar PV modules attract 12% GST (HSN 8541), solar inverters 18% (HSN 8504 40 90), lithium-ion batteries 18% (HSN 8507), mounting structures 18% (HSN 7308/7610), cables and switchgear 18% (HSN 8536/8544), and solar Engineering Procurement Construction (EPC) services 18% (SAC 99837). The effective blended rate on a turnkey EPC contract works out to approximately 13.8% because panels dominate the cost basket. Commercial buyers recover this fully via ITC; residential buyers do not.
Read this whether you are a homeowner double-checking a vendor invoice, a Chief Financial Officer (CFO) planning a 1 MW captive plant, or a Chartered Accountant signing off on a solar capitalisation entry. The numbers below are pulled from current Central Board of Indirect Taxes and Customs (CBIC) notifications and the GST Council meeting record.
How GST on Solar Settled to Current Rates in 2026
The current rate matrix is the outcome of three policy phases. From 2017 to mid-2022, solar PV modules and most “renewable energy devices” sat at a concessional 5% GST. That phase ended at the 47th GST Council meeting in June 2022, which moved photovoltaic cells, modules, solar water heaters, and most renewable energy device categories to 12%. Inverters and BoS components were already at 18% under their parent electrical-machinery HSN headings and stayed there.
The October 2021 Council meeting had already clarified — through Circular 163/19/2021-GST issued by CBIC — that the 12% rate applies to renewable energy devices and parts, not just finished solar systems. That cleared up the long-running argument about whether a mounting structure shipped with panels could be billed at 12%. CBIC said no — structures are taxed on their own HSN heading (7308 for galvanised steel, 7610 for aluminium), at 18%, regardless of end use.
From 2023 onward the structure has been stable. No headline solar rate change has come through the Council. The only adjustments since have been administrative — the 2024 e-invoicing threshold drop to ₹5 crore turnover, the 2025 push toward the Invoice Management System (IMS) for ITC reconciliation, and the ongoing Reverse Charge Mechanism (RCM) clarifications for inter-state installation services. Going into 2026, you can plan a solar capital expense with confidence that the rates below will not change mid-project. If you want the broader buyer-level commentary on this same structure, our GST on solar — full buyer’s guide covers the practical contracting angles. For the original July 2022 rate context, see our companion piece on GST rates on solar panels and inverters.
The Solar GST Rate Matrix — 8 HSN Codes That Matter
Most solar invoices in India touch eight HSN/SAC codes. Know these eight and you can audit any quotation, any tax invoice, or any ITC ledger in minutes. We call this the Solar GST Rate Matrix and use it across every commercial project Heaven Green Energy bills.
| # | Component / Service | HSN / SAC Code | GST Rate (2026) | Typical share of EPC cost |
|---|---|---|---|---|
| 1 | Solar PV cells & modules (panels) | 8541 | 12% | 55–65% |
| 2 | Solar inverter (string / central) | 8504 40 90 | 18% | 8–12% |
| 3 | Lithium-ion / Li-Fe-PO storage batteries | 8507 60 / 8507 80 | 18% | 0–25% (hybrid only) |
| 4 | Solar pump motor (DC / AC) | 8501 / 8413 | 12% / 18% | Pump systems only |
| 5 | Module mounting structure (GI / aluminium) | 7308 / 7610 | 18% | 6–9% |
| 6 | DC + AC cables, connectors, glands | 8544 | 18% | 3–5% |
| 7 | MCBs, isolators, ACDB/DCDB, contactors | 8535 / 8536 / 8537 | 18% | 3–5% |
| 8 | Solar EPC / installation services | SAC 99837 | 18% | 8–12% (labour & design) |
Source: CBIC GST Rate Finder, CBIC Notification 8/2022-Central Tax (Rate), GST Council meeting minutes (47th and onward), as in force on 1 April 2026.
Four points to flag immediately. First, panels alone — at 12% on the largest cost line — drag the blended rate sharply downward, which is why the effective blended on a typical residential EPC sits near 13.8%, not 18%. Second, the solar inverter clarification under HSN 8504 40 90 keeps the rate at 18%; some Council notifications in 2021–22 did create the impression that solar-specific inverters had dropped to 12%, but that interpretation was withdrawn through subsequent CBIC clarification — the rate is 18% in 2026. Third, lithium-ion batteries are 18% across the board — there is no solar concession. Fourth, EPC services billed as a pure works contract under SAC 99837 carry 18%, but the goods supplied within that contract retain their own HSN-wise rates if the invoice is split correctly.
Component-Wise GST Rates Explained
Solar PV cells and modules (HSN 8541) — 12%. This covers monocrystalline Passivated Emitter Rear Contact (PERC) panels, Tunnel Oxide Passivated Contact (TOPCon) bifacial panels, Heterojunction Technology (HJT) panels, and thin-film modules. The 12% rate applies regardless of wattage, brand, or country of origin (Customs duty is a separate matter). HSN 8541 also covers solar cells imported for assembly — relevant for domestic content manufacturers. The 2022 GST amendment maintained 8541 at 12% and that has held through 2026.
Solar inverters (HSN 8504 40 90) — 18%. String inverters, central inverters, and hybrid inverters all sit at 18%. A common vendor argument is that “solar inverters” should be 12% as a renewable device — CBIC’s position, reinforced through 2023 advance rulings, is that the inverter is classified by its electrical-machinery character under heading 8504, not by its end use. Some advance rulings at the state Authority for Advance Ruling (AAR) level have argued for 12% on inverters supplied as part of a composite supply contract; CBIC has not adopted this nationally. Treat 18% as the safe rate.
Lithium-ion and storage batteries (HSN 8507) — 18%. Battery Energy Storage Systems (BESS), residential hybrid battery packs, and standalone Lithium Ferro-Phosphate (LFP) batteries are all 18%. This makes hybrid and off-grid systems materially more expensive after tax than grid-tied systems. We’ve covered the budgeting impact in our breakdown of how to calculate solar ROI.
Solar pump motors (HSN 8501) — 12%. Solar water-pumping systems under the PM-KUSUM scheme attract 12% on the motor-pump set, because they fall under “solar power-based devices” in the rate notification. Standard non-solar pumps under HSN 8413 are 18%. The invoice classification matters — solar pumps incorrectly billed under 8413 lose the concessional rate.
Mounting structures (HSN 7308 / 7610) — 18%. Galvanised iron (GI) structures fall under 7308 (structures of iron or steel) at 18%. Aluminium structures fall under 7610 at 18%. There is no concessional solar rate; CBIC explicitly clarified this through Circular 163/19/2021-GST. The carve-out attempt — that structures shipped with panels should be billed at 12% as a composite supply — was rejected.
Cables, MCBs, switchgear (HSN 8536 / 8544) — 18%. DC cables, AC cables, Multimode Cable 4 (MC4) connectors, Miniature Circuit Breakers (MCBs), isolators, AC Distribution Board (ACDB), DC Distribution Board (DCDB), and surge protection devices all sit at 18% under their parent electrical-equipment HSNs.
PCB inverter parts (HSN 8534) — 18%. Printed Circuit Board (PCB) assemblies, capacitors, and Insulated Gate Bipolar Transistor (IGBT) modules used in inverter manufacturing are 18%. Relevant for Original Equipment Manufacturers (OEMs) and large repair contracts, not for end users.
Solar EPC services (SAC 99837) — 18%. Engineering, procurement, and construction services for solar power plants fall under SAC 99837 (other professional, technical and business services — installation services). The rate is 18%. This is where most invoicing errors happen — when contractors bundle goods and services into a single EPC line at 12% (using the panel HSN), the GST officer at the time of audit will reclassify the labour portion at 18% and demand the differential.
Effective Blended Rate on EPC Contracts
The effective blended rate is what actually matters for budgeting. It depends on the cost basket. For a representative 5 kW residential EPC at ₹2,50,000 (excluding tax), the breakdown looks like this:
| Cost line | Share of pre-tax cost | Pre-tax (₹) | GST rate | GST (₹) |
|---|---|---|---|---|
| Solar PV modules | 60% | 1,50,000 | 12% | 18,000 |
| Inverter | 10% | 25,000 | 18% | 4,500 |
| Mounting structure | 8% | 20,000 | 18% | 3,600 |
| Cables, MCB, BoS | 5% | 12,500 | 18% | 2,250 |
| Net meter + connection items | 2% | 5,000 | 18% | 900 |
| EPC services (labour, design, commissioning) | 15% | 37,500 | 18% | 6,750 |
| Total | 100% | 2,50,000 | Blended | 36,000 |
Blended GST on the basket: ₹36,000 ÷ ₹2,50,000 = 14.4%. For panel-heavy baskets (65% modules), the blended drops closer to 13.8%; for inverter-heavy baskets like commercial central-inverter plants, it can rise to 15–16%. As a planning rule of thumb, use 13.8% for residential PM Suryaghar systems and 15% for commercial systems with larger inverter and BoS shares.
A persistent mistake is for vendors to issue the entire invoice at 18% — that’s the panel-line GST overcharge a residential buyer must catch. On a ₹2.5 lakh job, that error costs the homeowner about ₹9,000 in unrecoverable tax (residential buyers cannot claim ITC, so the overcharge is a real cash cost). For the equivalent commercial buyer, the overcharge gets recovered via ITC; the cash damage is zero but the documentation hassle is real. We covered the cheap-quote warning signs that often correlate with sloppy GST handling in red flags in a cheap solar quote.
Get a GST-compliant quote. Our team issues itemised invoices with the right HSN code on every line — residential PM Suryaghar or commercial captive plants alike. Get your free quote →
Residential 5 kW GST Calculation Example
Take a Jaipur homeowner installing a 5 kW grid-tied rooftop system. Quoted pre-tax cost is ₹2,50,000. They are an unregistered individual — no GSTIN, no ITC available. PM Suryaghar subsidy is ₹78,000 (3 kW cap), which is calculated on the pre-tax Ministry of New and Renewable Energy (MNRE) benchmark, not on the final tax-inclusive invoice.
| Step | Amount (₹) |
|---|---|
| Pre-tax EPC quote | 2,50,000 |
| GST at blended 14.4% (component-wise correct) | 36,000 |
| Tax-inclusive total | 2,86,000 |
| Less: PM Suryaghar subsidy (Direct Benefit Transfer) | (78,000) |
| Net out-of-pocket | 2,08,000 |
| If vendor wrongly charged flat 18% — extra tax cost | + 9,000 |
For a residential buyer, every percentage point of blended GST converted into actual paid GST is real money. There is no way to recover it as ITC. The only protection is to verify the HSN code line by line, demand a 12% panel line, and refuse to sign off on a single-line invoice. The MNRE subsidy formula does not reimburse the GST gap — what the homeowner pays in tax stays paid.
For Jaipur-specific subsidy stacking and the JVVNL process around this invoice, our PM Suryaghar JVVNL process guide walks through the application paperwork. To estimate this for your own bill, use the Heaven Green solar calculator.
Commercial 100 kW GST + ITC Example
Now take a Jaipur-based manufacturing unit installing a 100 kW captive rooftop solar plant. Pre-tax EPC cost is ₹45,00,000. The unit is GST-registered, files Goods and Services Tax Return Form 3B (GSTR-3B) monthly, and has output GST liability on its product sales of around ₹8 lakh per month.
| Step | Amount (₹) |
|---|---|
| Pre-tax EPC quote | 45,00,000 |
| Panel line (60% of cost) at 12% GST | 3,24,000 |
| Inverter + BoS + structures + cables (25%) at 18% GST | 2,02,500 |
| EPC services (15%) at 18% GST | 1,21,500 |
| Total GST (blended 14.4%) | 6,48,000 |
| Tax-inclusive total | 51,48,000 |
| ITC claimed in GSTR-3B (month of invoice) | (6,48,000) |
| Set-off against output GST liability | Recovered |
| Effective tax cost to business | NIL |
The GST paid on the solar capex is fully recoverable as ITC because the solar plant is a capital good used to supply taxable output (manufactured goods). Under Section 16 of the Central GST (CGST) Act and Rule 43 of the CGST Rules, capital goods ITC is claimed in full in the month of receipt of invoice, subject to the 180-day payment rule and the supplier being correctly registered.
On top of ITC, the commercial buyer also gets 40% accelerated depreciation (AD) on the pre-tax cost of the solar plant in Year 1 under the Income Tax Act — that’s a separate income-tax benefit, covered in our deep-dive on accelerated depreciation on solar tax savings. Stack ITC + AD and the post-tax payback on a commercial rooftop in 2026 falls under 4 years for most manufacturing buyers.
GST Changes Timeline 2022–2026 — What Stays and What Could Change
| Year | Change | Impact on solar buyers |
|---|---|---|
| Jul 2022 (47th GST Council) | Solar PV modules moved from 5% to 12%; mounting structures clarified at 18% | Residential and commercial cost rose ~4–5%; structures couldn’t piggyback the panel rate |
| Sep 2022 (CBIC Notification 8/2022) | Inverter classification reinforced at 18% under 8504 40 90 | Ended dispute over whether solar inverters could be at 12% |
| 2023 (48th–52nd Councils) | No change to solar HSN rates | Stability for FY 2023–24 capex planning |
| Oct 2023 (CBIC clarification) | EPC services for solar plants — SAC 99837 at 18%, not 12% | Several states’ AAR rulings overruled — composite supply at 12% disallowed |
| 2024 (CBIC) | E-invoicing threshold lowered to ₹5 crore turnover | Mid-size solar EPC firms now mandated to e-invoice — better ITC trail for buyers |
| 2025 (IMS rollout) | Invoice Management System rolled out for ITC reconciliation | Commercial buyers must match supplier GSTR-1 monthly — sloppy vendor filings now block ITC |
| 2026 (current) | No new solar rate change scheduled | Plan capex with current matrix; watch 56th Council meeting minutes for any battery rate review |
The two things to watch in 2026 are an industry representation to drop lithium-ion battery GST from 18% to 12% (under discussion but no Council notification yet), and a state-level Authority for Advance Ruling petition on whether rooftop EPC for residential customers should be re-classified as works contract under SAC 9954 at 18% rather than under 99837. Neither is imminent. For up-to-date Council outcomes, the GST Council meeting minutes and the CBIC notifications page are the primary sources.
Common GST Misunderstandings
The same six mistakes show up across audits, invoices, and ITC reconciliations. Each one is preventable with a one-minute check before signing.
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1
"Solar is exempt from GST." No solar component or service is GST-exempt. Panels are concessional at 12%; everything else is 18%. The exemption confusion comes from the renewable-energy electricity charge exemption — that's tariff policy, not GST law.
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2
Flat 18% on the entire EPC invoice. The most common residential overcharge. Insist on a component-wise split: panels at 12% under HSN 8541, BoS at 18%, services at 18%. A flat 18% bill on a ₹2.5 lakh job costs the homeowner ~₹9,000 in unrecoverable tax.
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3
Single-line "Solar System Installed — 12%." Treating the whole project as panels at 12% may look cheaper but fails GST audit. The labour and BoS portions get reclassified at 18% with interest and penalty. Commercial buyers should reject this invoice format outright.
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4
Mounting structure at 12%. CBIC Circular 163/19/2021-GST disallowed this. GI and aluminium structures stay at 18% under 7308/7610 regardless of solar use.
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5
Inverter at 12% under a state AAR ruling. Some state-level Authority for Advance Ruling decisions allowed 12% for solar inverters as part of composite supply. CBIC has not adopted this nationally. Safe rate for invoice and ITC is 18% under HSN 8504 40 90.
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6
Missing the 180-day payment rule. Commercial buyers claim ITC in GSTR-3B but then fail to pay the EPC vendor within 180 days. The ITC has to be reversed with 24% interest. Track invoice age every month against payment status.
Watch out
Inter-state EPC contracts — where the EPC vendor's GSTIN is in one state and the site is in another — attract Integrated GST (IGST). Some installation services also fall under Reverse Charge Mechanism (RCM) if billed by an unregistered sub-contractor. The buyer pays RCM directly to the government, then claims it back as ITC the same month. Confirm the RCM status with your EPC partner before issuing the purchase order.
Pro tip
For commercial buyers, ask your EPC vendor for the GST Identification Number (GSTIN) up front and verify it on the [GST portal](https://www.gst.gov.in/) before signing the contract. An invalid or suspended GSTIN means your ITC will be denied no matter how clean the invoice looks. The verification takes 30 seconds and saves lakhs in disputed credit.
Residential vs Commercial GST Treatment
The same GST law, two very different financial outcomes.
- Full ITC recovery — net GST cost is zero
- Stack ITC with 40% accelerated depreciation in Year 1
- Inverter at 18% is irrelevant — fully recovered
- Battery at 18% becomes affordable — full ITC available
- Post-tax payback under 4 years
- No ITC — entire GST is real cash cost
- PM Suryaghar subsidy calculated on pre-GST cost only
- Battery at 18% makes hybrid systems painful
- Vendor overcharging at flat 18% hard to detect
- Tax gap adds ~₹36,000 to a 5 kW project
Verdict. GST policy in 2026 is structurally friendly to commercial solar — between ITC and accelerated depreciation, the post-tax economics of a commercial rooftop in Jaipur or Delhi sit at 35–40% Internal Rate of Return (IRR). It is structurally harsh on residential solar — every rupee of GST is a real cost the homeowner bears with no offset. The mitigation for residential buyers is purely procurement discipline: verify HSN line by line, refuse flat-18% invoices, and walk away from single-line “solar system” quotations. The mitigation for commercial buyers is bookkeeping discipline: match every vendor GSTR-1 monthly through the Invoice Management System, settle invoices inside 180 days, and capitalise the asset correctly to claim depreciation. Get either one wrong and the rate matrix above stops being a benefit and starts being a leak. Explore the asset side options through residential solar or commercial solar.
How Heaven Green Energy Bills GST Compliantly
We’ve been a GST-registered EPC company since 2018 and have completed over 10,000 installations across residential, commercial, and industrial segments. Our standard invoicing practice on every project, irrespective of size:
- Component-wise HSN split — each line carries its own HSN code, GST rate, and Central GST (CGST) / State GST (SGST) / IGST breakup. No flat-rate invoices.
- MNRE benchmark price on the panel line — for PM Suryaghar applications, the pre-GST module cost matches the MNRE benchmark so subsidy paperwork passes the first review.
- Verified GSTIN on every supplier — our procurement team validates each panel, inverter, and BoS vendor’s GSTIN on the GST portal monthly; ITC for commercial clients stays clean.
- E-invoice with Invoice Reference Number (IRN) — every invoice above the ₹5 crore turnover threshold gets an Invoice Registration Portal (IRP) QR code; matches automatically into the buyer’s Invoice Management System.
- 180-day reminder system — commercial clients get an automated alert at day 150 of any unpaid invoice to protect their ITC claim.
- RCM advisories on inter-state contracts — if your project is in a different state from our billing GSTIN, we flag the IGST and RCM implications before purchase order issue.
Pick the service track that matches your project:
- Residential Solar — PM Suryaghar end-to-end with itemised GST invoicing.
- Commercial Solar — 10–500 kW captive plants with full ITC + accelerated depreciation structuring.
- Solar Calculator — savings, subsidy, and tax-inclusive payback for your specific bill.
- Contact our tax desk — a 30-minute call with our finance team to map your GST position before you sign any EPC contract.
For the practical buyer’s-side commentary on what to ask before signing, our GST on solar buyer’s guide is the matching companion to this rate-focused deep-dive.
Frequently Asked Questions
What is the GST rate on solar panels in India in 2026?
Solar photovoltaic cells and modules attract 12% GST under HSN code 8541 in 2026. This rate covers monocrystalline PERC, TOPCon bifacial, HJT, and thin-film panels regardless of wattage or brand. The rate has been steady since the July 2022 GST Council revision moved panels up from 5% to 12%. Inverters, mounting structures, and Balance of System (BoS) components carry 18% under their own HSN headings.
What is the GST rate on solar inverters in 2026?
Solar inverters — string, central, and hybrid — attract 18% GST under HSN code 8504 40 90 in 2026. Despite some state-level Authority for Advance Ruling decisions arguing for 12% under composite supply, CBIC’s national position has consistently held inverters at 18%. Treat 18% as the safe rate for both invoicing and Input Tax Credit purposes. The inverter’s higher rate is the main reason a turnkey solar EPC contract’s blended rate sits at 13.8–15% rather than at the headline 12%.
What is the effective blended GST rate on a turnkey solar EPC contract?
For a panel-heavy residential rooftop system where modules are 60–65% of the cost basket, the effective blended GST rate works out to approximately 13.8–14.4%. For inverter-heavy commercial central-inverter plants, the blended rate rises to 15–16%. The lower blended rate compared to the headline 18% comes from panels being concessional at 12% and dominating the cost mix. Always insist on a component-wise GST invoice rather than a flat-18% invoice to capture the panel-line concession.
Can a residential homeowner claim ITC on solar GST under PM Suryaghar?
No. A residential homeowner is not registered under GST, does not file GSTR-3B, and cannot claim Input Tax Credit on solar GST. The full GST amount paid is a real cash cost added to the project. PM Suryaghar subsidy is calculated on the MNRE benchmark pre-GST cost — it does not reimburse the tax. The only protection for residential buyers is procurement discipline: verify each HSN code, demand 12% on the panel line, and refuse flat-18% single-line invoices.
Can a commercial business claim ITC on the GST paid on a captive solar plant?
Yes. A GST-registered commercial business that uses the solar plant for taxable business activities can claim full Input Tax Credit under Section 16 of the CGST Act. The solar plant qualifies as a capital good and ITC is claimed in GSTR-3B in the month the invoice is received, subject to the 180-day payment rule. ITC stacks with the 40% Year-1 accelerated depreciation under the Income Tax Act, making post-tax payback under 4 years for most manufacturing buyers.
What HSN code should be on a solar mounting structure invoice?
Galvanised iron (GI) module mounting structures fall under HSN 7308 (structures and parts of structures of iron or steel) at 18% GST. Aluminium mounting structures fall under HSN 7610 at 18% GST. CBIC Circular 163/19/2021-GST explicitly clarified that mounting structures are taxed under their own metal-structure HSN heading, not under the concessional 12% solar-device rate. Any invoice billing structures at 12% will fail GST audit.
What is the GST rate on solar batteries in 2026?
Lithium-ion and Lithium Ferro-Phosphate (LFP) batteries used in solar Battery Energy Storage Systems attract 18% GST under HSN 8507. Lead-acid batteries also attract 18%. There is no concessional solar rate for batteries. This makes hybrid and off-grid solar systems materially more expensive after tax than grid-tied systems. Commercial buyers can recover this through ITC; residential buyers absorb it as cash cost.
Are there any GST rate changes on solar expected in 2026?
No major rate changes have been notified by the GST Council for solar in 2026. The structure has been stable since the July 2022 revision and through the 47th to 56th Council meetings. Industry representations to drop battery GST from 18% to 12% are under discussion but have not been adopted. The 2025 Invoice Management System rollout is the most operationally relevant recent change — it affects how commercial buyers reconcile ITC against vendor GSTR-1 filings each month. Monitor the GST Council meeting page for any updates.
Does the PM Suryaghar subsidy cover the GST component?
No. The PM Suryaghar Central Financial Assistance is calculated on the MNRE benchmark cost, which is a pre-GST figure. The GST you pay on top of that is a separate cost borne by the homeowner. For a 3 kW system with MNRE benchmark ₹1.26 lakh, the GST gap is roughly ₹15,000–₹18,000 — not reimbursed. The ₹78,000 subsidy still covers more than half the net cost, but budget the GST as an additional outlay.
What is Reverse Charge Mechanism for solar EPC and when does it apply?
Reverse Charge Mechanism (RCM) requires the buyer — not the supplier — to deposit GST directly to the government. It applies in solar EPC when an unregistered sub-contractor supplies installation services to a registered buyer, or when certain notified categories of inter-state services are involved. The buyer pays the RCM GST in cash, then claims it back as ITC the same month. For a commercial solar buyer, the net cash impact is nil, but the compliance work is real. Confirm with your EPC partner whether any line items fall under RCM before issuing the purchase order.
