GST on Solar Panel 2025-26 — Panels, Inverters, Water Heaters & Equipment Rates

Updated: 3 June 2026 | FY 2025-26 | Renewable Energy GST | HSN 8541 / 8504

Solar panels (photovoltaic cells and modules) attract 12% GST under HSN 8541 40. All major solar equipment — solar inverters, solar charge controllers, solar water heaters, solar water pumps, and solar street lights — also attract 12% GST. This concessional rate is part of India's renewable energy policy. Section 80EEB is an income tax deduction for EV loans and does not apply to solar panels. Registered businesses can claim ITC on solar equipment installed for commercial use.

12%

GST on solar panels, inverters, controllers, water heaters — all at 12%
HSN 8541 for PV cells/panels. HSN 8504 for solar inverters. No GST on solar electricity sold under net metering (electricity is outside GST).

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PM Surya Ghar Scheme: Under the PM Surya Ghar Muft Bijli Yojana, residential rooftop solar installations up to 3 kW receive central government subsidy. The subsidy reduces your net cost — GST of 12% applies on the full value before subsidy deduction on your invoice.

GST Rate Table — Solar Equipment (2025-26)

Solar Equipment	GST Rate	HSN Code	Notes
Solar photovoltaic (PV) panels / modules	12%	8541 40	Mono, poly, bifacial, thin-film panels
Solar PV cells (individual)	12%	8541 40	Cells before assembly into panels
Solar inverters (string, micro, hybrid)	12%	8504 40	DC-to-AC conversion for solar systems
Solar charge controllers (MPPT/PWM)	12%	8537 10	Regulates battery charging from solar panels
Solar water heaters (flat plate and ETC)	12%	8419 19	Domestic and commercial solar water heaters
Solar water pumps	12%	8413 70	Agriculture and domestic solar pumps
Solar street lights	12%	9405 40	Integrated solar street lighting units
Solar batteries (for solar storage)	12%	8507	Batteries specifically for solar energy storage
Solar lanterns / home lighting systems	12%	9405 40	Off-grid solar lanterns and lighting kits
Solar thermal collectors	12%	8419 19	For industrial and process heat applications
Solar panels installation / EPC services	12% / 18%*	—	*18% if treated as pure works contract; 12% if composite supply of goods

Solar PV Panels — HSN 8541 Classification

12% GST

Photovoltaic Cells and Modules (HSN 8541 40)

Solar photovoltaic cells whether or not assembled in modules or panels fall under HSN 8541 40. The 12% GST rate applies to all types — monocrystalline, polycrystalline, thin-film (amorphous silicon, CdTe, CIGS), and bifacial panels. The reduced 12% rate (compared to the standard 18% for most electronic goods) reflects India's commitment to expanding solar energy capacity under the National Solar Mission.

IMPORT DUTY

Import of Solar Panels — BCD and ALMM

Imported solar panels attract Basic Customs Duty (BCD) of 40% on panels and 25% on solar cells, in addition to 12% IGST. India's Approved List of Models and Manufacturers (ALMM) requirement means only ALMM-listed panels can be used in government-funded projects. This effectively protects domestic solar manufacturers from cheap Chinese imports.

Solar Inverters — 12% GST Under HSN 8504

Solar inverters (also called solar power conditioning units or PCUs) attract 12% GST under HSN 8504 40. This covers: string inverters (for large rooftop and utility systems), micro-inverters (panel-level conversion), central inverters (utility-scale plants), and hybrid/off-grid inverters (with battery charging capability). Ensure your purchase invoice specifies "solar inverter" — general-purpose inverters (home UPS) attract 18% GST and do not qualify for the 12% solar rate.

Solar Water Heaters — 12% GST

Solar water heaters (both flat plate collector and evacuated tube collector types) attract 12% GST under HSN 8419 19. This covers domestic solar water heaters (100L, 200L, 300L systems) and commercial solar water heaters for hotels, hospitals, and industries. Solar water heating systems supplied and installed by contractors attract 12% GST if the principal supply is the equipment, or 18% if classified as a works contract service — check your contractor's invoicing practice.

Section 80EEB — EV Loans Only, Not Solar

Important clarification: Section 80EEB provides an income tax deduction of up to ₹1.5 lakh per year on interest paid on loans for purchasing electric vehicles. It does NOT cover solar panel financing or solar system loans. For solar systems installed for business use, depreciation under Section 32 applies at applicable rates. Residential solar installations: no specific income tax deduction, but central and state government subsidies are available under PM Surya Ghar and similar schemes.

ITC for Businesses Installing Solar Panels

Purchaser	ITC on Solar Equipment	Condition
Factory / industrial unit	Available (12% ITC)	Solar used for captive power for taxable manufacturing
Commercial office / mall	Available (12% ITC)	Power used for taxable business activities
Hotel / restaurant	Available (12% ITC)	Power used in GST-taxable hospitality supply
Residential building	Not available	Personal use — no ITC for individual consumers
Solar power developer (IPP)	Restricted*	*Electricity supply is exempt from GST; ITC may be blocked for exempt supply

Frequently Asked Questions

What is the GST rate on solar panels in India?

Solar panels (photovoltaic cells and modules) attract 12% GST under HSN code 8541 40. This concessional rate is part of India's renewable energy promotion policy. The GST Council has kept solar panels at 12% (reduced from 18% in some earlier classifications) to make solar energy more affordable for households and businesses. Solar PV cells (individual cells before assembly into panels) also attract 12% GST. Crystalline silicon panels (mono and poly), thin-film panels, and bifacial panels all qualify for the 12% rate. When you purchase rooftop solar panels, your installer's invoice should show 12% GST on the supply of panels.

Is GST applicable on solar inverters and what is the rate?

Yes, solar inverters attract 12% GST. This covers string inverters, micro-inverters, hybrid inverters, and solar charge inverters used in solar power systems. The 12% rate for solar inverters was maintained as part of the renewable energy equipment concession package. However, general-purpose inverters or UPS systems that are not specifically designated for solar use may attract 18% GST. When purchasing a solar inverter, ensure the invoice clearly specifies it as a solar inverter and applies 12% GST. The HSN code for solar inverters is generally 8504 40. Registered businesses can claim ITC on solar inverters purchased for commercial solar installations.

Does Section 80EEB tax deduction apply to solar panels?

No. Section 80EEB is specifically for interest on loans taken to purchase electric vehicles (EVs) — it does not apply to solar panel purchases or solar system loans. Section 80EEB allows a deduction of up to ₹1.5 lakh per year on interest paid on a loan taken for buying an electric vehicle. For solar panel systems, there is no equivalent dedicated income tax deduction section. However, if solar panels are installed for business purposes, the depreciation can be claimed as a business expense under Section 32. For residential solar installations, MNRE and state government subsidies (under PM Surya Ghar scheme) reduce the capital cost, though these are capital subsidies, not income tax deductions.

What GST applies when a contractor installs a complete solar system (supply + installation)?

When a contractor provides a complete solar system — including panels, inverters, wiring, and installation — as a composite supply or works contract, the GST rate depends on the nature of the contract. If it is a composite supply of goods and services where the principal supply is goods (solar equipment), the applicable rate follows the goods rate of 12% for solar components. However, if the installation is treated as a works contract (services), it may attract 18% GST on the service component. The CBIC has clarified that solar power generating systems installed as a whole can qualify for the 12% concessional rate if the principal supply is the solar system equipment. Always ask your installer for a detailed invoice showing GST rates separately for equipment and services.

Can businesses claim ITC on solar panels installed at their office or factory?

Yes. Registered businesses can claim Input Tax Credit (ITC) on GST paid for solar panels, inverters, charge controllers, and related equipment installed at their office, factory, warehouse, or any business premises — provided the solar system is used for business electricity generation (i.e., for taxable supplies). The 12% GST paid on the solar equipment purchase is available as ITC to be offset against the business's GST output liability. ITC on installation services is also available if the installer is GST registered. ITC is NOT available if the solar system is installed at a residential property not used for business, or if the output electricity is sold under an exempt category. Maintain proper GST invoices and e-way bills for ITC claims on solar equipment above ₹50,000 per consignment.

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