India’s solar energy sector is entering a new era of affordability and expansion, thanks to the GST reforms announced in September 2025.
The GST Council’s decision to reduce the tax rate on solar goods from 12% to 5% is a strategic move that lowers project costs and boosts adoption across residential, commercial, and industrial segments.
This reform directly reduces the effective GST on solar installations, making rooftop solar systems and utility-scale projects more financially viable.
Homeowners and MSMEs can now invest in solar energy with reduced upfront costs and faster payback periods.
The change is expected to drive higher adoption rates, especially in urban and semi-urban areas where solar potential remains largely untapped.
The GST reduction also supports India’s “Make in India” initiative by encouraging domestic manufacturing of solar modules, inverters, and other components.
It aligns with the Production Linked Incentive (PLI) scheme and helps reduce dependence on imported solar equipment, strengthening the solar supply chain.
Here’s a breakdown of the financial impact: