In a major boost to India’s clean energy movement, the government has reduced GST on solar systems to just 5%—a significant drop from the earlier 12% on individual components like panels, and inverters. This bold move makes solar power more affordable for homeowners and more profitable for installers, especially in states like Kerala, where solar adoption is rapidly growing.
What Is the New GST Policy on Solar?
Previously, different components of a solar power system were taxed separately at 12% & 18% —often adding up to 13.8% GST. Now, the government has streamlined the process: entire solar systems, including equipment and installation, are taxed at 8.9%. A drop of 4.9%.
This makes solar more cost-effective and simplifies the billing and installation process for both customers and installers.
Impact on Homeowners in Kerala
Lower Costs: With the GST cut, families in Kerala can now install solar systems at significantly reduced prices.
Subsidy Stays Intact: The GST cut does not impact your eligibility for government subsidies—you can enjoy both benefits simultaneously.
Greater Savings: A 3kW solar system can now cost ₹10,000 less in GST. Add a central subsidy, and you could save nearly ₹1 lakh on your installation.
Faster Payback: With reduced upfront costs, many households in Kerala can expect to break even in 3–5 years, followed by nearly 20 years of free electricity, saving anywhere from ₹10–15 lakhs.
Benefits for Solar Installers
Easier to Sell: Installers can offer lower prices without cutting their profit margins.
Simplified Billing: Lower tax rate means fewer complications and faster invoicing.
Increased Demand: Lower prices mean more families and businesses are likely to go solar, driving sales.
Why Quality Still Matters
While the lower tax makes solar more accessible, it’s vital not to compromise on quality. Cheap panels may underperform, require frequent maintenance, and reduce long-term savings.
Always choose the best solar panels in Kerala—ones with:
High efficiency
Proven durability for Kerala’s climate
Strong warranties
Ensure your installer uses reputable brands and offers professional services, from design to installation and paperwork.
The Role of Experienced Installers
Solar is more than just installing panels. A reliable installer ensures:
Proper system design
Structural safety
Accurate government documentation
Seamless subsidy claims
After-sales service and maintenance
Companies like SolarTech are helping Kerala residents take full advantage of these new GST benefits while ensuring quality and compliance every step of the way.
Frequently Asked Questions
Q: How much will homeowners save with 5% GST?
A: A 5kW system may see ₹14,000 in GST savings, and with subsidies, total savings could exceed ₹1 lakh.
Q: Can I get subsidies and GST benefits together?
A: Yes. Both apply separately, giving you double the savings.
Q: Is the 8.9% GST rate applicable to all solar systems?
A: Yes, as long as it’s a complete solar setup for residential or commercial use.
Q: Does this apply to hybrid systems too?
A: Absolutely. You can still claim subsidies and the GST benefit on hybrid solar systems.
Q: Why hire a professional installer?
A: Experienced installers handle:
Government approvals
Structural safety
Long-term performance
Warranty and service
Conclusion: A Milestone in India’s Green Energy Drive
The GST reduction to 5% marks a turning point in India’s solar journey. For homeowners in Kerala, it presents the perfect opportunity to switch to clean, affordable energy.
If you’re considering solar, now is the time. Choose quality. Choose savings. Choose experts.
Let a trusted solar company in kerala like SolarTech guide you through a smooth, affordable, and rewarding solar journey.