GST Rate Schedule for the Solar Industry

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The past few months were marked by substantial speculation around how GST will affect the solar industry. Sunkalp Energy had run a few analyses¬†which had indicated a 12-15% increase in the cost of solar. Further we had made some recommendations for including solar and components in ‘zero’ lists.

This Friday the Government released final Goods and Services Tax (GST) rates under the new indirect tax regime proposed to be rolled out from July 1. Below GST rates will be applicable on solar goods:

  • Solar Panel -5%
  • Solar Cells -18%

  • Solar Batteries-18/28%
  • Solar Inverter -5%
  • Solar PCU-5%
  • Solar Structure-18%
  • Solar wires-18%
  • Solar I&C-28%
  • Solar Power pack-5%
  • Solar water heater-5%
  • Solar street light-5%
  • Solar pump-5%

GST Schedule

Considering that many states including Rajasthan, Uttar Pradesh and Haryana had so far exempted solar equipment including solar panels from VAT, the new GST rates will have a direct cost impact on the consumers.

In fact, many EPC companies and distributors alike, had opened offices and warehouses in the states where VAT exemption could be claimed in a bid to reduce the cost per Wp for their customers.

More significantly, cost of solar panels, which contribute to up to 60% of a solar project’s cost is set to increase with a GST rate of 18% on solar cells, with little visibility so far on input tax benefit on the import of solar cells.

Generally, for grid synchronous solar plants, I see the cost increasing by up wards of 3 – 5 Rs/Wp. This will likely cause a commissioning rush before July 1st, akin to the one we see in March each year.

More worrisome is the impact that these GST rates will have on RESCO/ PPA projects. Will developers still be able to viably set up solar plants and sell electricity at the aggressive tariffs given that their installation costs are set to rise?

25 thoughts on “GST Rate Schedule for the Solar Industry

  1. This is a sad news as far as penetration of solar PV installations on roof top. A cost increment of Rs 5 /Wp will pose a barrier to achieving the targeted installation as agreed @COP 21 climate action programme. At a time things were beginning to pick up on resedetial roof top solar installations it has come as a big impediment.

    1. Dear ma’m,
      Which type of solar panel is subsidised?
      Indian manufactured or foreign manufactured or both?and how subsidy is applicable on solar panels?

  2. Now government is rethinking about not applying gst on solar products and raw material or may put them in lowest slab

  3. Dear Mam,

    May i know the latest GST rates on Installation and commission and O&M expenses.


  4. what is the GST Rate on Off Grid Solar Power plant consisting of Batteries. Solar Module, PCU, Invertor with installation & commissioning

    Also let me know the GST on Solar Street Light complete with Solar Module, Batteries, LED Luminaires with MS Pole


    PLEASE INFORM US TAX RATE ON Design, Manufacture, Testing, Supply, Installation & Commissioning of
    Grid-connected Rooftop SPV Power Plants of different capacities
    including five years Comprehensive Maintenance Contract (CMC) on Turnkey basis on Government Buildings
    anywhere in the state of


  6. For solar street light, we purchased solar panel @gst 5%, solar battery @gst 28%, solar light led @gst12%, iron pole @gst18%, wire @gst18%.

    How we made sale bill of solar street light @gst 5%? & How took credit of input gst???

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