GST on Solar Panels and Installation in India (2026) — Complete Tax Guide for Dealers

Q: What is the GST rate on solar panels in India in 2026?

Solar PV modules attract 12% GST (HSN 8541 40 11), raised from 5% effective 2022. Inverters and cables also 12%. Always verify current rate with a CA and on gst.gov.in.

Q: Are solar products fully exempt from GST?

No. They attracted reduced 5% GST earlier, raised to 12%. Current rate is 12% for most core solar components including panels and inverters.

Q: Can homeowners claim GST refund on solar installation?

No. Homeowners buying solar for personal use cannot claim ITC. Businesses using solar for taxable output supply may be eligible — consult a CA for your specific situation.

📅 June 5, 2026 · ⏱ 8 min read · ✍️ SolarCalculators.in Editorial Team

⚠️ Disclaimer: For informational purposes only. Prices and regulatory details are approximate and subject to change. Verify from official government portals and consult a qualified advisor before making investment decisions.

GST treatment of solar products is one of the most commonly misunderstood areas in the solar business. Mistakes in GST billing can lead to penalties, input tax credit (ITC) denial, and customer disputes. This guide covers the correct GST rates, HSN codes, and practical billing guidance for solar dealers in India as of 2026.

⚠️ Tax Disclaimer: GST rates and HSN code classifications can change via GST Council notifications. Always verify current rates with a qualified Chartered Accountant and on the official gst.gov.in portal before invoicing. This guide is for general orientation only.

GST Rates on Solar Products (2026)

Product / Service	HSN Code	GST Rate	Notes
Solar PV Modules (panels)	8541 40 11	12%	Increased from 5% in 2022
Solar Inverters	8504 40 90	12%
Solar Charge Controllers	8504 40 30	12%
Solar Batteries (Lithium)	8507 60 00	18%
Solar Batteries (Lead Acid)	8507 10 00	28%	Higher rate — specify correctly
Mounting Structures (GI/Aluminium)	7308 / 7610	18%	Varies by material
DC Cables	8544 49 90	12%
Solar Water Pumps	8413	12%
Installation & EPC Service	9954	12%	Works contract for solar
Annual Maintenance Contract (AMC)	9987	18%	Service contract

HSN codes and rates as understood as of June 2026. Always confirm with your CA. Composite supply rules may apply if equipment + installation are bundled.

Composite Supply: The "Works Contract" Rule

When you sell solar panels + installation as a single bundled "turnkey solar installation" contract, it may qualify as a Works Contract under GST. Key implications:

A works contract for immovable property (rooftop solar is treated as immovable in many interpretations) attracts GST as applicable to the principal supply
If solar is the principal supply (which it is in most EPC contracts), some argue the composite rate should apply
Practical approach used by most dealers: Issue separate invoices for equipment (12%) and installation service (12%) to maintain clarity and avoid ambiguity

This area has seen litigation and evolving rulings. Consult a CA specialising in GST before finalising your billing structure.

Input Tax Credit (ITC) for Solar Dealers

As a GST-registered solar dealer, you can claim ITC on:

Solar panels, inverters, cables purchased for resale (claim ITC at purchase, pay GST on sale)
Business expenses like vehicle fuel (limited ITC), office rent, etc.
Tools and equipment purchased for your business

ITC is not claimable by end customers (homeowners) on solar system purchases, as it is used for personal consumption (not for taxable output supply).

Billing Best Practices for Solar Dealers

Always issue GST-compliant invoices with correct HSN codes, GSTIN of buyer (if B2B), and tax breakdowns
Separate equipment and service line items on your invoice for clarity
File GSTR-1 and GSTR-3B on time — delays attract interest and late fees
Maintain purchase invoices from suppliers for ITC claims — always buy from GST-registered distributors
Check e-invoicing requirement — applicable if your annual turnover exceeds ₹5 crore (as of 2026)

GST and PM Surya Ghar Subsidy

The PM Surya Ghar subsidy is deducted from the total system cost by the government before billing the customer. Your GST invoice to the customer should be for the net amount after subsidy deduction, or alternatively, issue the invoice for the full amount and show the subsidy as a reduction — your CA should guide you on the correct treatment to avoid GST liability mismatch.

🔗 Related Guides

Business Registration Documents How to Become Solar Dealer Dealership Investment Guide Solar Cost Calculator

Frequently Asked Questions

What is the GST rate on solar panels in India in 2026?

Solar PV modules attract 12% GST under HSN 8541 40 11. This was increased from 5% effective October 2021/2022 as per GST Council notification. Solar inverters and cables also attract 12%. Always verify the current rate with a CA and on gst.gov.in.

Are solar products fully exempt from GST?

No. Solar products are not fully exempt. They attracted reduced 5% GST earlier, which was later raised to 12% for modules and inverters. The exemption that existed was partial and has been revised. Current rate is 12% for most core solar components.

Can homeowners claim GST refund on solar installation?

No. Homeowners purchasing solar for personal residential use cannot claim Input Tax Credit. GST paid on solar installation is a cost for homeowners. Only businesses using solar for taxable output supply (like commercial premises) may be eligible for ITC — consult a CA for your specific situation.

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