In 2025, the switch to solar energy became increasingly appealing to homeowners, businesses, and even solar installers in India. The government has also cut down the GST rate on solar panels and other renewable energy equipment by 5 per cent, lower than the previous charges. It is not merely an adjustment but a transformation in the field of pricing and decision-making for solar projects.
You should be aware of these changes if you are considering installing solar panels or obtaining quotes from providers. As one of the top Solar Installation Companies in Delhi NCR, Gridwise Solar is updated with the new GST reforms and it’s impact on pricing.
What Changed in the New GST Reforms on Solar Panels?
Rate Drop from 12% to 5%
The GST Council, in the 56th meeting, adopted the rationalisation of GST on renewable energy devices. The solar cells, solar modules (panels), solar water heaters, solar lanterns, lamps, and other solar power-based products will incur a 5% GST, rather than the previous 12% tax.
These changes took effect on 22 September 2025. Invoices and bills should reflect the low rate after that date, at which all supplies or purchases will be made.
What Solar equipment is covered
The new rate includes a wide array of solar and clean energy equipment:
•Solar panels (elements), assembled or not.
•Solar cells.
•Whole solar water heating systems and solar water heaters.
•Solar cookers, solar lamps/solar lanterns.
•The rationalised regime also includes other renewable energy systems, such as windmills, biogas plants, and waste-to-energy plants.
What May Still Be Ambiguous
•Batteries: There are reports that non-lithium-ion batteries should or should not be treated differently under different GST rates (e.g., 18%), or that they should or should not be immediately subject to the 5% rate.
•Accessories/Stand-alone parts: It has accessories, wiring and mounting structures, which, when sold individually, may continue to attract different rates based on the manner in which they are categorised under the HSN codes. Never forget to check with your installer or your tax consultant.
Importance of the GST Change in Solar Panel
The actual effect of the reduction of tax to 5% is real:
Reduced Upfront Cost
In the case of residential rooftop solar, the initial capital expenditure has been reduced. For example, Solar system costs will be reduced because of modules.
Boost for Subsidy Schemes and Adoption
Schemes like the PM Surya Ghar Muft Bijli Yojana are making electricity more affordable for households. With a lower GST rate, subsidies have a more significant impact on reducing the overall cost, making solar systems more accessible to more families. As a result, a larger number of households can adopt solar power.
Benefit for DISCOMs, and Manufacturers
•The capital cost of utility-scale solar projects is also expected to decrease by about ₹20–25 lakh per MW for projects that were previously subject to higher GST on modules and cells.
•Thousands of crores of expense on power purchases are likely to be saved by DISCOMs, as less expensive elements of renewable energy will lower tariffs in general.
•Local production is boosted: with reduced taxes, margins will improve, prices will become more competitive, and the production of solar cells and modules, as part of the Make in India initiative, is encouraged.
What GST Change Means for Homeowners & Small Installations
Looking to install rooftop solar in Delhi NCR (or any other place)? Here are the modifications that have been made available to you:
Lower Cost Estimates
Costs of components (panels, cells, etc.) are now likely to have reduced taxation when an installer quotes you on a rooftop solar system. That translates to a superior aggregate price. The savings are huge even when labour and mounting fees are not reduced.
Faster Break-Even
The lesser the taxes on key cost components, the shorter the payback period for solar investments. Lower costs mean households can reach the break-even point faster and start enjoying savings sooner.
More Transparent Quotes
The quotes provided to you by installers who are abreast of the new rules must reflect:
•Price of panels/ modules inclusive of tax.
•Actual GST applied (5%)
•Any exemptions or subsidies
•Final price to you
A quote that includes GST will be a sure way to avoid hidden expenses.
Impact on GST Costs: Key Examples
Here are sample numbers to illustrate the change. These are approximate and intended for comparison purposes only, and should not be considered final quotes.
| System Size | Old GST rate (12%) | New GST Rate (5%) | Approximate Savings* |
| 3 kW rooftop system | Say panels/modules cost ₹1,20,000 — GST ≈ ₹14,400 | GST ≈ ₹6,000 | Savings ≈ ₹8,400 on that portion |
| 5 kW rooftop system | If modules cost ₹2,00,000 — GST at old = ₹24,000 | GST new = ₹10,000 | Savings ≈ ₹14,000 on modules part |
| 5 HP solar pump (agricultural) | Cost ~₹2,50,000 — old GST ₹30,000 | New GST ₦ ₹12,500 | Savings ₹17,500 |
These savings will only be on reducing components with GST, the total cost of system savings will be determined by the extent to which the components will cover the overall cost.
What Solar Installation Companies Must Do Now
When you are hiring a solar installation company Delhi NCR, or you are a company offering solar services, what to look at and implement is the following:
•Update Product Listings and Quotes: Ensure that all quotes issued after September 22, 2025, include the 5% GST rate applied to eligible components. When you come across quotes that still use 12%, ask about the reason behind it.
•Check HSN Codes and Correct Classification: Solar modules, cells, and devices must be properly classified on invoices to be eligible for the 5% slab. Misclassification would lead to increased tax or post-invoice rework.
•Check Battery Treatment: If you have batteries in your system, check if they are lithium or non-lithium batteries, and also verify the exact GST rate applicable to your battery type. There are still some that are likely to attract higher rates.
•Explain yourself to customers: Make your quotations simple, such as ‘Panel cost + 5% GST,’ and demonstrate the savings that will result from the change. This builds trust.
•Modify Pricing when in Subsidy Schemes: When dealing with a government scheme, ensure that subsidy calculations are made so that customers are not quoted subsidy values based on the old, overstated prices.
•Amend Marketing and Sales Material: Call attention to the new rate of GST in marketing: “Now 5 per cent GST on solar modules, etc. This can be a good selling point.
Risk, Caveats and What to Watch Out For
This GST reform is good; however, there are some traps to be observed:
•Purchases prior to 22 September: Supply/tax invoices dated prior to the effective date should be of the old GST rates. Transitional supplies may require compliance documentation.
•Battery & Accessory Rates Vary: Not everything will be 5%. Batteries (especially lithium types), standalone accessories or parts not clearly defined may still attract older or different rates.
•Delayed Benefit Transfer: It is not the case that the reduction of GST will automatically result in a full cost cut to customers. Other firms do not always reduce quote prices to the maximum, or have already paid increased taxes on stock.
Correct documentation is critical: Customers must ensure that invoices clearly display the GST slab, product type, and other relevant details. This assists with the claims of subsidies and in the event of an audit.
Conclusion
The New GST on Solar Panels in 2025 would be a huge step towards clean energy in India. The government has achieved this by lowering the GST to 5% on solar panels, modules, and other renewable energy equipment, which has drastically reduced the barrier to entry for solar adoption.
To homeowners, this will translate to improved price quotes, quicker payback, and cleaner energy. In the case of solar installation companies, such as Delhi NCR-based solar installation companies, it presents an opportunity to gain trust, compete based on transparency, and scale in a responsible manner.
Gridwise Solar is the best Solar panel installation company in Faridabad, with a great track record of success, transparent operations, and high-quality products, which makes the selection very easy. Power up your house, reduce your bills, and make Delhi NCR greener. Are you ready to go solar because we are? Register for a free consultation.
