Quick Facts
What CFA is
Central Financial Assistance (CFA) is the direct subsidy provided by the central government (through MNRE) to beneficiaries of central solar schemes. The subsidy is credited to the beneficiary’s bank account after the solar installation is commissioned, DISCOM net-metering is approved, and inspection is complete.
CFA is the principal central government financial support for distributed solar deployment in India. Multiple schemes offer CFA at various levels:
PM Surya Ghar Muft Bijli Yojana: Residential rooftop. Rs 30,000 to Rs 78,000.
PM KUSUM Component A: Decentralised solar plants. Specific structure.
PM KUSUM Component B: Standalone solar pumps. 30% of cost.
PM KUSUM Component C: Grid-connected pump solarisation. Variable.
Phase-II Grid-Connected Rooftop Programme: Commercial and institutional. Varying by category.
CFA is administered through MNRE’s Direct Benefit Transfer (DBT) mechanism, with funds flowing directly to beneficiary bank accounts after scheme conditions are met.
PM Surya Ghar CFA in detail
PM Surya Ghar is the flagship residential rooftop solar scheme, with structured CFA:
| System Size | CFA Amount |
|---|---|
| Up to 1 kW | Rs 30,000 |
| Up to 2 kW | Rs 60,000 |
| 3 kW or larger | Rs 78,000 (maximum) |
The CFA cap of Rs 78,000 applies regardless of system size beyond 3 kW. Systems of 4 kW, 5 kW, or 10 kW all receive the same Rs 78,000 from central government.
For typical 3 kW residential rooftop:
Gross system cost: about Rs 1.65 lakh.
PM Surya Ghar CFA: Rs 78,000.
Net cost after CFA: Rs 87,000.
State add-on subsidy (in some states): Rs 10,000 to Rs 20,000.
Final out-of-pocket: Rs 65,000 to Rs 80,000.
The combined central plus state subsidy can cover 40% to 50% of system cost for many residents.
PM KUSUM CFA structure
PM KUSUM has multiple components with different CFA structures:
Component A (Decentralised solar plants on farmland):
CFA varies by tender. SECI procures the power at a tariff that includes CFA component.
Direct subsidy to the project may be limited.
Component B (Standalone solar pumps):
Central CFA: 30% of system cost.
State subsidy: typically 30% (varies by state).
Farmer contribution: 40% (reduced in some states with additional subsidy).
For a 5 HP pump costing Rs 3.50 lakh: Central Rs 1.05 lakh + State Rs 1.05 lakh + Farmer Rs 1.40 lakh.
Component C (Grid-connected pump solarisation):
Similar structure to Component B.
Specific provisions for feeder-level solarisation.
State add-on subsidies
Many state governments add their own subsidies on top of central CFA:
Gujarat: Suryashakti Kisan Yojana with additional state benefits.
Maharashtra: State subsidies under Mukhyamantri schemes.
Karnataka: Karnataka Krishi Bhagya Yojana with state component.
Tamil Nadu: TANGEDCO subsidies for specific categories.
Rajasthan: Various rooftop and agricultural solar add-ons.
For applicants, combining central CFA with state subsidies maximises total support. The applications usually go through the same portal (unified through PM Surya Ghar or SNA-specific portals).
CFA disbursement process
For PM Surya Ghar residential CFA:
-
Consumer registers and applies through national portal.
-
Vendor (MNRE-empanelled) is selected.
-
DISCOM verifies feasibility.
-
Installation proceeds.
-
DISCOM installs bidirectional net-metering meter.
-
Inspection by DISCOM and SNA.
-
CFA application is submitted to MNRE.
-
CFA is credited to consumer’s registered bank account via DBT.
Total timeline: typically 4 to 8 weeks from commissioning to CFA receipt.
For commercial and industrial rooftop solar with central subsidy:
Similar process through State Nodal Agency.
Timeline often 8 to 12 weeks.
Documentation requirements more extensive.
Common CFA documentation
For PM Surya Ghar CFA disbursement, applicants typically provide:
Application form from national portal.
Aadhaar card (for identity).
Electricity bill (recent, in applicant’s name).
Bank account details for DBT (in applicant’s name).
Property documents (proof of building ownership or NOC if rented).
Vendor invoice for the solar installation.
Commissioning certificate from EPC/vendor.
DISCOM net-meter installation and inspection certificate.
Photographs of installed system.
Mismatched information (e.g., bank account in different name) is the most common cause of disbursement delays.
CFA conditions and obligations
Receiving CFA imposes conditions on the beneficiary:
The system must remain operational. Premature dismantling can require refund.
The system must continue net metering with DISCOM throughout the warranty period.
The system must be used for its intended purpose (residential consumption for residential CFA, agricultural use for KUSUM CFA).
The beneficiary must allow periodic inspection by DISCOM or SNA.
Major modifications (capacity increase beyond 10 kW for residential) may require approval.
For PM Surya Ghar: the system is intended to last 25 years; the CFA is for the 25-year operating period.
CFA taxation
CFA tax treatment:
For residential consumers without business income: not a tax concern (no income tax implications for residents).
For commercial consumers: typically treated as a capital subsidy reducing the depreciable cost basis. For Accelerated Depreciation calculations, the CFA is deducted before applying depreciation.
For complex tax scenarios, consult a chartered accountant for company-specific treatment.
Common CFA mistakes
Choosing non-empanelled vendor or non-ALMM modules. CFA is denied for these installations.
Mismatching documentation. Bank account or property details not matching can delay CFA.
Skipping the national portal. Going through informal channels can void CFA eligibility.
Underestimating timeline. CFA takes weeks; applicants should plan financing accordingly.
Forgetting state add-on subsidies. Many states offer additional benefits beyond central CFA.
Best practices
For new residential rooftop applications, use the PM Surya Ghar national portal from the start.
Verify vendor empanelment and ALMM module compliance before signing installation contracts.
Maintain accurate documentation throughout the application process.
Ensure bank account is in the consumer’s name (matching the electricity bill).
Plan financing to bridge the CFA disbursement timeline.
Combine central CFA with available state add-on subsidies for maximum benefit.
Standards and references
CFA is governed by MNRE notifications for each scheme. PM Surya Ghar guidelines specify residential CFA. PM KUSUM guidelines cover agricultural CFA. Phase-II Rooftop Programme guidelines cover commercial CFA. MNRE issues clarification circulars from time to time.
Related glossary terms
Key takeaways
Central Financial Assistance (CFA) is the direct subsidy provided by the central government through MNRE for solar installations under specific schemes. PM Surya Ghar provides residential CFA from Rs 30,000 to Rs 78,000 for systems up to 10 kW. PM KUSUM Component B provides 30% CFA for standalone solar pumps. State governments often add their own subsidies on top of central CFA. Disbursement happens via DBT to the beneficiary’s bank account after installation, commissioning, DISCOM net-metering, and inspection. ALMM-listed modules and MNRE-empanelled vendors are required for CFA eligibility.