GST on Solar Panels: Rate, Installation, Inverters, and ITC

Solar equipment can be sold individually or supplied as part of a larger solar power generating system. The tax treatment depends on the goods covered by the relevant rate entry and the nature of the overall contract. Do not apply a single rate to every line item without checking the classification and the contract.

For qualifying contracts involving specified renewable-energy goods supplied with construction, installation, or other services, the prescribed valuation approach may deem 70% of the gross contract value to be the value of goods taxed at 5%, with the remaining 30% treated as taxable services at the applicable standard rate. This treatment should be used only where the relevant legal conditions apply; it is not a universal rule for every solar installation.

Worked example: GST on a qualifying solar contract

Assume a qualifying contract is valued at Rs. 48,000 and the prescribed 70:30 valuation treatment applies. The illustrative calculation is:

This is an illustration, not a rate ruling for every project. Confirm whether the contract and supplies qualify for the 70:30 valuation treatment, and verify the applicable service rate before using the calculation on an invoice. Once you are done with the calculation and move towards securing external finance, you can check your pre-approved business loan offer and see how a business loan can help you,

The table below is a starting point for checking an invoice. Classification must follow the product’s description and the applicable tariff entry; a component’s use in a solar project does not, by itself, guarantee the rate for a specified renewable-energy device.

Last updated: 22 October 2026

Ask the supplier to show the HSN/SAC classification and GST rate on the tax invoice. If a quote combines eligible renewable-energy devices with other goods and services, request an itemised breakdown and the legal basis for the valuation method.

GST affects the tax component of a solar purchase, but it does not determine the final price on its own. The equipment specification, installation scope, supplier margin, transport, and other items included in the quote can also affect the amount payable.

The reduction from 12% to 5% can lower the tax component for specified renewable-energy devices covered by the revised entry. It should not be described as a universal 5% rate for all solar components or every installation service. Compare quotations on the same basis, including equipment capacity, warranties, installation work, taxes, and any subsidy assumptions.

A GST-registered business should follow these checks before claiming ITC on solar equipment or installation:

• Confirm registration and eligibility: Check that the business is registered under GST and that the purchase is used for eligible business purposes connected with taxable supplies. Registration alone does not make every expense eligible.
• Keep a valid tax invoice: Check that the supplier’s GST details, invoice particulars, HSN/SAC codes, taxable values, and tax amounts are recorded correctly.
• Check statutory conditions: Confirm that the goods or services have been received, the supplier’s invoice is reported as required, and the applicable return and payment conditions are met.
• Review restrictions and apportionment: ITC may be unavailable or restricted for non-business use, exempt supplies, or blocked credits. Apply the relevant rules to mixed use.
• Reconcile returns and records: Maintain the invoice and supporting documents, reconcile the credit with GST records, and claim it through the applicable return process.

A household buying solar panels for personal use generally cannot claim business ITC. Government subsidies do not automatically remove GST from the invoice or create an ITC entitlement. For a specific installation, confirm eligibility and classification with a qualified tax professional.

A commercial solar project can create a cash-flow gap: you may need to pay for panels, eligible equipment, installation, or electrical upgrades before the savings or customer receipts arrive. First separate the GST treatment from the funding decision. Confirm the applicable HSN/SAC classification and whether the contract qualifies for any prescribed valuation treatment, then estimate the net project cost, payment milestones, and working-capital buffer.

If the expenditure is for an established business, a Bajaj Finance Business Loan may be worth considering for an eligible business need such as working capital, buying machinery, business expansion, or office and infrastructure renovation. It is a general business loan, not a solar-specific or green-energy loan, and the 

lender’s assessment determines whether the proposed requirement qualifies.

The loan amount ranges from Rs. 2 lakh to Rs. 80 lakh, with repayment tenures from 12 months to 96 months. The interest rates range from 14% to 23.50% per annum, and the processing fee can be up to 4.72% of the loan amount, inclusive of applicable taxes. No collateral is required under the stated product terms. The final offer, rate, fees, and tenure depend on eligibility, verification, the selected loan variant, and the applicable terms.

Eligibility includes Indian self-employed applicants aged 21 to 80 years, a business vintage of at least 3 years, and a CIBIL score of 650 or higher. Applicants should keep KYC documents, a PAN card, and proof of business ownership ready; additional financial documents may be requested. 

If you are assessing finance for a business installation, check your business loan eligibility and review the criteria before committing to a project budget.

• Click the 'Check Loan Offer' button to open the online application form.
• Enter basic details, including Name, PAN, Date of Birth, PIN Code, and Business details, and click 'CONTINUE'.
• Complete banking verification and continue.
• View your offer details, select the loan type — Term Loan, Flexi Dropline Loan, or Flexi Hybrid Loan — and choose the repayment tenure.
• Review the details and submit the business loan application.