GST on rooftop solar systems in India: 5% from 22 September 2025 and what it means
GST on solar power generators, modules and solar devices fell from 12% to 5% from 22 September 2025. How it applies to home systems, batteries and installation invoices.
GST on solar power generators, solar power-based devices and photovoltaic cells and modules was cut from 12% to 5% with effect from 22 September 2025, on the recommendation of the 56th meeting of the GST Council held on 3 September 2025. For a home rooftop system, that lowers the tax portion of the price by roughly seven percentage points of the pre-tax value. Batteries are a separate entry: lithium-ion batteries stay at 18%, and other electric accumulators such as lead-acid batteries moved from 28% to 18% in the same reform, so all batteries under heading 8507 are now at 18%. How the 5% applies to a turnkey contract that includes installation depends on how the supply is classified and invoiced, so ask your vendor for a clear GST breakup. This guide explains the change, shows the arithmetic, and lists what to check on your invoice.
What changed
The GST Council's press release on the 56th meeting lists, under "Renewable energy (12% to 5%)":
- solar cookers;
- solar water heaters and systems;
- renewable energy devices and parts for their manufacture, including solar power-based devices, solar power generators, solar lanterns and lamps, wind and waste-to-energy devices, and photovoltaic cells, whether or not assembled in modules or made up into panels.
The changes in GST rates on these goods took effect from 22 September 2025. The Central Board of Indirect Taxes and Customs (CBIC) issued the rate notifications that give legal effect to the Council's recommendations; those notifications, not press summaries, are the legal text.
Worked example: what a home buyer saves (illustrative)
Take a 3 kW on-grid system with a pre-tax value of ₹1,71,430.
| Before 22 Sep 2025 (12%) | From 22 Sep 2025 (5%) | |
|---|---|---|
| Pre-tax value | ₹1,71,430 | ₹1,71,430 |
| GST | ₹20,572 | ₹8,572 |
| Price incl. GST | ₹1,92,002 | ₹1,80,002 |
The difference is about ₹12,000. After the PM Surya Ghar CFA of ₹78,000, the net cost falls from about ₹1,14,000 to ₹1,02,000, which shortens the simple payback by a few months at an illustrative ₹21,000 yearly saving (from about 5.4 to 4.9 years).
Whether you see the full reduction depends on the vendor passing it on. Compare quotations on the pre-tax price and check that the GST rate on the invoice is the current one.
Turnkey contracts: supply plus installation
Most home systems are sold as a package: modules, inverter, structure, cables, installation and commissioning. GST law treats a package like this as a composite supply or as separate supplies depending on how it is structured and invoiced, and the rate notifications have for some years contained a specific rule for solar power generating systems supplied with services, deeming part of the value to be goods and part to be services taxed at the standard services rate. Under that rule, 70% of the gross contract value is treated as goods and 30% as services. From 22 September 2025 the goods entry is serial number 437 of Schedule I of Notification No. 9/2025-Central Tax (Rate) (5%), and Notification No. 15/2025-Central Tax (Rate) links the services entry (serial number 38 of Notification No. 11/2017, standard rate of 18%) to it. That gives 5% on the 70% goods portion and 18% on the 30% services portion, an effective rate of about 8.9% (0.7 × 5% + 0.3 × 18%). On the ₹1,71,430 example, that would be about ₹15,260 of GST instead of ₹8,572. How a particular contract is structured and invoiced still matters, so confirm the position for your quotation with the vendor or a chartered accountant.
What it means for you in practice:
- Ask the vendor to show on the quotation which rate applies to which part of the price.
- If installation is charged as a separate service line, it may carry a different GST rate from the goods.
- An invoice showing a single "solar system" line at 5% is common for small systems; keep it, as you will upload it for the subsidy.
Batteries and other items
| Item | GST position after the September 2025 reform | Note |
|---|---|---|
| Solar modules, solar power generator | 5% | Entry for renewable energy devices |
| Lithium-ion batteries | 18% (unchanged; already 18% before the reform) | Not part of the 5% solar entry |
| Lead-acid and other non-lithium accumulators | 28% → 18% | Inverter batteries for backup |
| Solar water heater | 5% | Separate entry |
| Inverter bought separately | Depends on classification | Ask the seller; a solar-specific device may be treated differently from a general inverter |
Because battery GST is separate, a hybrid system's total tax is higher in rupees than an on-grid system of the same kW. See home batteries: lithium vs lead-acid.
Can a household claim input tax credit?
No. Input tax credit is available to registered businesses using goods for business. A household installing rooftop solar for its own home pays GST as a final cost. A business or a commercial building owner installing solar should take advice on ITC eligibility.
Does GST affect the subsidy?
The PM Surya Ghar CFA is a fixed amount per kW, not a percentage of the price, so the GST cut does not change the subsidy amount. It lowers the net cost you pay after the subsidy.
What to check on your invoice
- GSTIN of the vendor, invoice number and date;
- HSN code and description for the solar system or components;
- GST rate and amount, split into CGST and SGST (or IGST for inter-state supply);
- system capacity in kW, module make and wattage, inverter make;
- consistency with your quotation and with the details uploaded on the portal.
You can check a vendor's GSTIN on the GST portal's public search. An invoice without GST details can cause problems with the subsidy and with warranty claims.
Back to the pillar guide: rooftop solar cost and payback. Related: DCR modules, ALMM and BIS, solar quotation and vendor checklist.
Frequently asked questions
I paid 12% GST in August 2025. Can I get a refund?
No. The rate that applies depends on the time of supply under GST law, which is generally linked to the invoice date or payment. Rates are not applied retrospectively.
Does the 5% apply to solar water heaters too?
Yes, solar water heaters and systems were in the same 12% to 5% list.
Why is my battery taxed at a higher rate than my panels?
Batteries are classified under a different heading from solar generators and modules, and the September 2025 reform listed them separately.
Should I ask for a cash discount without a bill?
No. Without a proper invoice you cannot claim the subsidy and may struggle with warranty claims.
Official sources
- GST Council — press release and FAQs on the 56th meeting
- Central Board of Indirect Taxes and Customs — GST rate notifications
- GST portal — search a taxpayer's GSTIN
- PM Surya Ghar national portal — invoice upload requirements
