On-grid solar panel systems are the most widely adopted in India, especially in urban areas, because they directly connect with the electricity grid and reduce monthly bills through net metering. But before installing one, it’s essential to understand the GST impact on the total cost.
GST Rates for On-grid Solar Systems (2025):
• Solar Panels (PV modules) – 5% GST
• Solar Inverter (On-grid / String / Central) – 5% GST
• Other Accessories (wires, mounting structure, junction boxes, etc.) – 18% GST (if purchased separately)
• Turnkey EPC Supply (bundled panels + inverter + BOS + services) – Effective 8.9% GST (clarified by Govt. in 2018, still applicable in 2025)
👉 For homeowners, most EPC companies charge an 8.9% GST blended rate to keep things simple.
Components of an On-grid Solar System:
• Solar PV Modules (main cost)
• On-grid Inverter (string inverter/microinverter)
• Mounting Structure + Cabling + DC/AC Distribution
• Net Meter (provided by DISCOM, outside GST scope)
Example GST Calculation (5kW On-grid System):
Let’s calculate for a 5kW residential rooftop solar system.
Base Cost (before GST):
• Solar Panels (5kW @ ₹25/Wp) = ₹1,25,000 → 5% GST = ₹6,250
• On-grid Inverter = ₹50,000 → 5% GST = ₹2,500
• BOS + Mounting + Cables = ₹25,000 → 18% GST = ₹4,500
Total Base Price = ₹2,00,000
Total GST = ₹13,250
Grand Total = ₹2,13,250
Turnkey EPC with Blended GST:
If you buy a full EPC package, the 8.9% blended rate is applied to the total project cost.
For the same 5kW system @ ₹2,00,000 base price:
• GST @ 8.9% = ₹17,800
• Final Price = ₹2,17,800
This rate often works out cheaper compared to buying components separately, since most EPC companies get system supplies bundled under SPGS (Solar Power Generating Systems).
Conclusion:
For on-grid solar systems in India, GST is straightforward if you purchase through an EPC vendor — you’ll pay around 8.9% blended GST on the entire project. If you buy components separately, expect 5% on panels and inverters but 18% on accessories.
