SolarCalculatorsWhat Is Accelerated Depreciation for Solar?
Under Section 32 of the Income Tax Act, businesses can claim depreciation on assets used for income generation. Solar power plants — including rooftop and ground-mounted systems — fall under Plant and Machinery and qualify for 40% Written Down Value (WDV) depreciation per annum as of FY2025-26.
Prior to the new tax regime changes, solar had an 80% accelerated depreciation rate. This was revised to 40% — still significantly higher than the 15% standard rate for general plant and machinery, making solar one of the most tax-efficient capital investments for Indian businesses.
Not sure what size you need? Our free solar calculator works out system size, cost after subsidy and payback from your monthly electricity bill.
Depreciation Rates — Solar Assets (FY2025-26)
| Asset | IT Act Category | Depreciation Rate |
|---|---|---|
| Solar PV panels | Plant & Machinery (Block 6) | 40% |
| Solar inverter (grid-tied / hybrid) | Plant & Machinery | 40% |
| Solar battery storage | Plant & Machinery | 40% |
| Mounting structure (galvanised steel) | Plant & Machinery | 15% (structure) |
| Balance of System (cables, combiner box) | Plant & Machinery | 15–40% |
| General Plant & Machinery | Block 3 | 15% |
Note: Mounting structures are sometimes grouped with the plant (40%) when part of an integral solar installation. Consult your CA for asset classification specific to your invoice/installation type.
How Is Solar Depreciation Calculated? (WDV Method)
India uses the Written Down Value (WDV) method — depreciation is calculated on the reduced book value each year, not on the original cost. Here's how it works for a ₹5 lakh solar plant at 40%:
| Year | Opening WDV (₹) | 40% Depreciation (₹) | Closing WDV (₹) | Tax Saved* (₹) |
|---|---|---|---|---|
| Year 1 | 5,00,000 | 2,00,000 | 3,00,000 | 60,000 |
| Year 2 | 3,00,000 | 1,20,000 | 1,80,000 | 36,000 |
| Year 3 | 1,80,000 | 72,000 | 1,08,000 | 21,600 |
| Year 4 | 1,08,000 | 43,200 | 64,800 | 12,960 |
| Year 5 | 64,800 | 25,920 | 38,880 | 7,776 |
| 5-Year Total | — | 4,61,120 | 38,880 | 1,38,336 |
*Tax saved assumes 30% tax bracket. Actual savings depend on your tax slab and applicable surcharges.
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Who Can Claim Solar Depreciation?
| Entity Type | Can Claim Solar Depreciation? |
|---|---|
| Sole Proprietorship / Partnership Firm | ✅ Yes — if solar system is used for business |
| Private Ltd / LLP | ✅ Yes — standard company depreciation rules apply |
| HUF (Hindu Undivided Family) | ✅ Yes — if income from business/profession |
| Salaried Individual (residential solar) | ❌ No — individuals cannot claim depreciation on personal assets |
| Rental Property Owner (commercial solar) | ⚠️ Consult CA — may be claimable as capital expenditure on income-producing property |
Half-Year Convention for Solar Depreciation
Under the Income Tax Act, if an asset is put to use for less than 180 days in the year of purchase, only 50% of the applicable depreciation rate is allowed in Year 1. For example, a solar system commissioned after 1 October (financial year starts 1 April) would get only 20% depreciation (50% of 40%) in Year 1, and 40% from Year 2 onwards.
Plan your commissioning date to maximise depreciation — systems commissioned before 30 September get the full 40% in Year 1.
Depreciation vs PM Surya Ghar Subsidy — Can You Claim Both?
If you avail the PM Surya Ghar subsidy (₹30,000–₹78,000), the depreciation base should typically be the net cost after subsidy — since the subsidy is a capital receipt reducing the asset's cost. However, the treatment of government grants vs depreciation base is nuanced and depends on accounting standard applied (IndAS 20 / AS 12). Always consult a CA for the correct treatment in your specific case.
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Get Free Commercial Quote →Documents Needed to Claim Solar Depreciation
- GST invoice from the solar installer (showing itemised cost: panels, inverter, mounting, installation)
- Commissioning certificate / handover report
- Net metering approval letter from DISCOM (proves plant is operational)
- Grid export data / generation log
- CA certificate (for audit purposes in larger installations)
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