Maximizing Business Tax Savings with Commercial Solar
As the second half of Financial Year 2026–27 gets underway, commercial and industrial (C&I) enterprises across India are accelerating rooftop solar installations to optimize their corporate tax liabilities. Under Section 32 of the Income Tax Act, solar energy systems qualify for 40% Accelerated Depreciation (AD).
30-Second Quick Takeaways
Essential tax shield rules for commercial solar
- The 180-Day Income Tax Rule: Solar plants commissioned before September 30 (put to use for >180 days in the financial year) qualify for the full 40% Accelerated Depreciation (AD) tax write-off in Year 1. Plants commissioned between October 1 and March 31 qualify for 50% of the AD rate (20% write-off in Year 1, remainder in Year 2).
- Section 32 Income Tax Shield: Eligible commercial entities (LLPs, Pvt Ltd, Public Ltd, Proprietorships) can deduct 40% of the solar project capital cost from taxable profits, reducing corporate income tax liability by up to 25%–30% of the plant cost.
- Additional 100% GST ITC: Businesses with active GST registration claim full Input Tax Credit (ITC) on the 12% GST charged on solar modules and inverters.
- Auditor Certification: Requires a Chartered Accountant (CA) certificate and DISCOM commissioning certificate establishing the 'Date of Put to Use'.
Understanding the 180-Day Rule for Solar Depreciation
| Commissioning Date Window | Days Put to Use in FY | Year 1 Allowable AD Rate | Year 2 Remaining AD Rate |
|---|---|---|---|
| April 1 – September 30 | >= 180 Days | Full 40% Write-Off | Written-Down Value (WDV) |
| October 1 – March 31 | < 180 Days | 50% of Rate (20% Write-Off) | Remaining 20% in Year 2 |
Sample Corporate Tax Shield Calculation (100kW Commercial Solar)
- Total Turnkey 100kW Solar Cost: ₹42,00,000
- Year 1 Depreciation (40%): ₹16,80,000 (deducted from gross business taxable profit)
- Net Corporate Income Tax Saved (at 25.17% Tax Rate): ₹4,22,856 saved in Year 1!
- Plus 100% GST Input Credit (ITC): ₹5,04,000 GST set-off against monthly outward GST liabilities.
INSTANT CALCULATION
⚡ Calculate Your 2026 Solar Savings & Subsidy
Select your monthly electricity bill to calculate the ideal system capacity, PM Surya Ghar subsidy, and lifetime savings:
Recommended System:
3.0 kW (Rooftop/Hybrid)
PM Surya Ghar Subsidy:
₹78,000 (Central Govt)
Net Out-of-Pocket Cost:
₹1,15,000 – ₹1,35,000
Estimated 25-Yr Savings:
₹9,80,000+
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Frequently Asked Questions (FAQs)
What is the difference in tax savings between commissioning solar in September vs October? +
Commissioning before September 30 allows claiming the full 40% AD write-off in the current financial year. Commissioning after October 1 splits the benefit: 20% write-off in the current FY and the remaining 20% carried into the next FY.
Can salaried individuals claim 40% accelerated depreciation on rooftop solar? +
No. Accelerated Depreciation under Section 32 is strictly available to individuals with Business/Professional Income (ITR-3 / ITR-4) or corporate entities filing business tax returns.
What documentation is required by tax auditors for claiming solar AD? +
Auditors require: 1) Tax invoices for solar equipment, 2) DISCOM bi-directional net-metering commissioning report, 3) Asset register entry, and 4) CA certificate certifying the Date of Commissioning.
Does Accelerated Depreciation apply to battery energy storage systems (BESS)? +
Yes! Integrated Battery Energy Storage Systems (BESS) installed alongside rooftop solar PV plants qualify for the same 40% Accelerated Depreciation tax benefit.