Since 22 September 2025, solar power devices such as modules and inverters carry 5 percent GST in India, and installation and other services carry 18 percent. For a complete supply and installation contract, the rules deem 70 percent of the value to be goods and 30 percent to be services, which works out to about 8.9 percent on the whole contract. This guide explains each rate, when the 70:30 split applies, how CGST, SGST and IGST work for solar, and how to show all of it on a quotation. GST rules change by notification, so confirm the current position with your accountant before you set your templates.
The rates in one place
These rates come from the GST rate notifications. Check the current notification on the CBIC website or with your accountant; the rate that applies is the one in force on the date of supply.
- Solar modules, inverters and other solar power generating devices and their parts: 5 percent, from 22 September 2025. The rate was 12 percent before that date.
- Installation, erection and other services supplied separately: 18 percent.
- Items that are not solar devices, such as general electrical items, may carry their own rates.
- A complete solar power plant supplied with installation as one contract: the deemed 70:30 split, explained below.
The 70:30 rule for complete solar contracts
When a solar power generating system is supplied together with its installation as one contract, the value of the contract is deemed to be 70 percent goods and 30 percent services. GST is then charged on each part at its own rate.
With the current rates, the effective rate on the whole contract is 0.70 times 5 percent plus 0.30 times 18 percent, which is 3.5 plus 5.4, or 8.9 percent.
This rule exists so that installers do not have to argue the value of goods and services in every contract. It applies to the contract as a whole; your accountant will tell you whether your contracts qualify and how to treat contracts written differently.
A worked example
Suppose a home system contract is worth Rs 2,00,000 before GST, supplied and installed as one contract:
- Goods portion, 70 percent: Rs 1,40,000 at 5 percent is Rs 7,000.
- Services portion, 30 percent: Rs 60,000 at 18 percent is Rs 10,800.
- Total GST: Rs 17,800, or 8.9 percent of Rs 2,00,000.
- Contract value with GST: Rs 2,17,800.
Supply only, or supply with installation
If you only sell modules or inverters, charge the rate for those goods. If you sell goods and installation as separate contracts, each carries its own rate. If you write one contract for a complete system, the 70:30 split is the usual treatment.
Whichever you choose, the quotation and the invoice must follow the same treatment. A quotation at one effective rate and an invoice at another is the most common GST mistake in solar billing.
CGST and SGST, or IGST
The place of supply decides the split. When your registration and the site are in the same state, the GST is divided equally into CGST and SGST. When they are in different states, the whole amount is IGST.
For an installation, the place of supply is generally where the system is installed. If you have registrations in more than one state, bill from the registration that matches the work.
HSN and SAC codes
Put the HSN code on each goods line and the SAC code on each service line. Solar modules fall under heading 8541 and inverters under heading 8504. Use the full code your accountant gives you, and keep it in your item master so it prints the same way every time.
GST and the PM Surya Ghar subsidy
The central subsidy for residential rooftop solar is a fixed amount per kW, not a percentage of the price. The customer pays the full price including GST to the installer, and the subsidy is paid into the customer's bank account later. So GST is calculated on the full contract value, and the subsidy is shown as a separate line below the total, not as a discount that reduces the taxable value.
E-invoicing
Businesses whose aggregate turnover crosses the e-invoicing threshold must report B2B invoices to the Invoice Registration Portal and print the IRN and QR code on them. The threshold has been lowered several times; check the current limit. Invoices to homeowners (B2C) are not e-invoiced in the same way, but the rest of the GST rules apply.
How to show GST on the quotation
- Show the price before GST, then each tax line, then the total with GST.
- If you use the 70:30 split, show the goods and services portions and the tax on each, so the customer can see where 8.9 percent comes from.
- Show CGST and SGST, or IGST, as the place of supply requires.
- Show the subsidy after the total, then the net cost.
- Print your GSTIN and, for business customers, theirs.
Common mistakes
- Using an old rate in a quotation template after the rate changed.
- Applying the 70:30 split on the quotation and a different treatment on the invoice.
- Charging IGST for a site in the same state, or the other way round.
- Deducting the subsidy before calculating GST.
- Leaving out HSN or SAC codes.
How RAYVO handles GST
In RAYVO each item carries its HSN or SAC code and rate, the quotation splits GST into CGST and SGST or IGST from the place of supply, the PM Surya Ghar subsidy prints as its own line below the total, and the invoice is created from the accepted quotation so the treatment stays the same. For B2B invoices RAYVO prepares the e-invoice JSON for the Invoice Registration Portal. When a rate changes, you change it once in your items and every new quotation uses it.
Frequently asked questions
Solar modules carry 5 percent GST from 22 September 2025, down from 12 percent. Confirm the current rate in the latest notification.
For one contract covering supply and installation, the value is deemed 70 percent goods at 5 percent and 30 percent services at 18 percent, about 8.9 percent overall.
GST is charged on the full contract value. The PM Surya Ghar subsidy is paid to the customer later and does not reduce the taxable value on the invoice.
It depends on the place of supply, generally the site. Same state as your registration means CGST and SGST; a different state means IGST.
If your aggregate turnover is above the current e-invoicing threshold, B2B invoices must be reported to the Invoice Registration Portal. Check the threshold that applies to you.