Solar Inverter HSN Code and GST Rate in India (2026)

Most solar quotes in India show one GST line and one percentage. That single number hides three decisions the supplier already made for you.

The first is classification. A panel and an inverter sit under different headings of the Customs Tariff, and the same notification taxes them under different entries. The second is supply type. A box of equipment and a full rooftop installation are not the same supply. The third is credit, which turns on who buys and how the output is used.

India rewrote its GST rate schedules in September 2025. The 12% slab is gone. Renewable energy devices moved into the 5% schedule. Plenty of older articles, and plenty of live quotes, still repeat the pre-2025 position.

This guide works from the notification text: the 5% entry, the 18% entry on heading 8504, the 70:30 valuation rule, the PM Surya Ghar interaction, input tax credit, invoice particulars, and a worked example.

This is general information, not tax advice.

Short version. GST on a solar inverter is not one fixed rate. Notification 9/2025-Integrated Tax (Rate), effective 22 September 2025, taxes renewable energy devices at 5% under Schedule I entry 437, and taxes heading 8504 static converters at 18% under Schedule II entry 477. Which entry applies turns on the description of the goods and the type of supply.

What the September 2025 notification actually changed

The GST Council recommended the change at its 56th meeting on 3 September 2025. CBIC issued Notification 9/2025-Integrated Tax (Rate) on 17 September 2025, corrected by a corrigendum dated 18 September 2025. It supersedes Notification 1/2017 and came into force on 22 September 2025.

It rebuilds the schedules from scratch. Schedule I carries 5% and Schedule II 18%. The 12% slab solar equipment sat in no longer exists.

Rates across the renewable energy value chain moved from 12% to 5%, and a typical 3 kW rooftop system was expected to become cheaper by about ₹9,000 to ₹10,500, according to the Ministry of New and Renewable Energy (2025).

The rate timeline in one table

Older articles and some live quotes still carry the earlier numbers, so it helps to see all three periods side by side. The 12% figure below belongs to the period that closed on 21 September 2025 and applies to nothing after it.

The effective rates are arithmetic, not separate legal rates: 70% of the value at the goods rate plus 30% at the 18% service rate. The 2017 to 2021 rows follow the timeline compiled by TaxGuru from CBIC notifications 1/2017, 24/2018 and 8/2021. The current row follows Notification 9/2025 itself.

Why an inverter is not automatically taxed like a panel

Panels have a clean path. Entry 437 names photovoltaic cells at item (h), whether or not assembled in modules or made up into panels. Inverters are named nowhere in entry 437. They reach the 5% schedule only through the general description, as a solar power based device or a part for the manufacture of a renewable energy device. Entry 437’s chapter column reads “84, 85 or 94”, a range rather than a tariff item, so the description does all the work.

Now the other side of the same notification. Schedule II entry 477 covers heading 8504: electrical transformers, static converters (for example, rectifiers) and inductors, other than EV chargers. An inverter is a static converter, so heading 8504 is where classification starts.

The drafting tells you something useful. Entry 438 of Schedule I names one heading 8504 product, the EV charger, and puts it at 5% by name. The notification knows how to move a named 8504 product into Schedule I, and it did not do that for solar inverters. So the 5% argument for a standalone inverter runs through the description, not the heading. A quote saying “5%, because solar” has not answered the question.

GST rate by component from 22 September 2025

The table below maps each line of a typical solar quote to the entry in Notification 9/2025-Integrated Tax (Rate). The same entries carry half the rate as Central Tax and half as State or Union Territory tax on an intra-State invoice, so 5% reads as 2.5% plus 2.5%, and 18% as 9% plus 9%. We read the notification text published by CBIC and the ICAI GST committee, checked on 14 October 2026.

Three notes on reading it. First, entry 437 also covers parts for the manufacture of these devices, and the notification does not list which parts. A supplier who argues that a structure or a cable is such a part needs to show how. Second, a battery bundled inside a branded solar kit is a classification question for your adviser, not something this table settles. Third, solar water heaters (entry 428) and solar cookers (entry 415) have their own Schedule I entries at 5%, which matter if you are quoting beyond power generation.

HSN starting points, line by line

A heading is where classification starts, not where it ends. Use this table to interrogate a quote, not to settle a rate.

How to read the GST line on an inverter quote

A hybrid inverter is also a static converter in heading 8504, and the notification does not name hybrid inverters separately from on-grid ones. The same classification question applies to both. Five checks make a quote easy to audit.

Qbits sells through dealers on a quote basis. The tax treatment on a dealer’s invoice is the dealer’s classification, so put the five questions to the dealer before you pay. Contact Qbits for the model description to take to them.

Composite supply: the 70:30 Explanation and when it bites

This is where most buyer confusion sits. Entry 437 carries an Explanation. Where entry 437 goods are supplied along with other goods and services, one of which is the taxable service at serial 38 of Notification 8/2017-Integrated Tax (Rate) dated 28 June 2017, the goods are deemed to be 70% of the gross consideration and the remaining 30% that service.

It is a deeming rule with a defined trigger. Work through it in order.

1. Confirm the contract supplies entry 437 goods.
2. Confirm it also supplies the serial 38 taxable service.
3. If both are present, split the gross consideration 70:30 by deeming.
4. Apply the goods rate to the 70% and the service rate to the 30%.
5. On a plain equipment sale with no serial 38 service, the Explanation does not apply.

Be precise about the service rate. Serial 38 of the Central Tax services notification, 11/2017-Central Tax (Rate), covers construction, engineering, installation, or other technical services for setting up solar power based devices. Its rate column reads 9% central tax, paired with 9% State tax, which is 18% in total.

Notification 15/2025-Central Tax (Rate), dated 17 September 2025 and effective 22 September 2025, amended that serial in one way only. It replaced the Explanation so that serial 38 is now read together with serial number 437 of Schedule I of Notification 9/2025-Central Tax (Rate). It did not change the rate column. So the service rate in the 70:30 arithmetic stays at 18%, while the goods rate moved from 12% to 5%.

Worked example: tax on an illustrative ₹1,00,000 quote

This is a worked example using an illustrative amount. ₹1,00,000 is chosen because the arithmetic rescales easily. It is not a Qbits price and not a statement about what any system costs. Qbits sells through dealers on a quote basis.

Assume the contract matches the Explanation to entry 437, the goods rate is 5%, and the service rate is 18% under serial 38. The formula: goods = gross × 0.70, service = gross × 0.30, tax = (goods × 5%) + (service × 18%).

Invoice total in this illustration: ₹1,08,900.

If a quote is already inclusive of tax at a blended 8.9%, the pre-tax value is the gross divided by 1.089. Never add GST again to a tax inclusive figure. For how equipment and installation scope get separated, see the 5 kW hybrid price guide and the solar panel price guide.

Second example: how separate invoices change the blend

The 70:30 deeming applies to a bundled contract. If you instead buy each item on its own invoice, every line takes its own entry and the blend depends on the mix. Per ₹10,000 of taxable value, a 5% line carries ₹500 of tax and an 18% line carries ₹1,800.

These are round numbers chosen only to show the arithmetic. They are not the price of any item. The blended rate is each line’s share of the invoice multiplied by its rate, then added up. If modules and inverter made up 60% of a separately invoiced bill at 5% and the remaining 40% sat at 18%, the blend would be 0.6 × 5% + 0.4 × 18% = 10.2%. A hybrid system with a battery line and more 18% items blends higher than an on-grid system with the same modules, which is why a hybrid quote deserves line-by-line reading. For equipment-only pricing, see the hybrid inverter price guide.

Composite supply, mixed supply and service contracts

Outside the solar-specific Explanation, the CGST Act has general rules. Section 8, read with the definitions in sections 2(30) and 2(74), taxes a composite supply at the rate of its principal supply and a mixed supply at the highest rate among the items. Entry 437’s Explanation is the solar-specific override: where its conditions are met, the 70:30 deeming applies whatever the invoice split says. Where they are not met, the general rules apply, so the contract wording and the invoice structure matter. An annual maintenance contract signed separately is its own service supply. Ask which service entry the contractor uses for it.

How GST sits next to the PM Surya Ghar subsidy

The subsidy and the tax are two calculations that never touch. Central Financial Assistance under PM Surya Ghar: Muft Bijli Yojana runs off a benchmark cost fixed by MNRE, not your invoice, and it reaches the consumer rather than reducing the supplier’s price. Getting this backwards is the most common budgeting error we see.

Here is what the scheme guidelines say, according to the Ministry of New and Renewable Energy (2024).

• Benchmark cost is ₹50,000 per kW for the first 2 kW and ₹45,000 for the additional kW, with effect from 13 February 2024.
• CFA is 60% of the benchmark cost of 2 kWp and 40% of the additional kWp, with nothing beyond 3 kWp. In effect, ₹30,000 per kWp for the first 2 kWp and ₹18,000 for the third. MNRE’s illustration: a 6 kW system gets ₹78,000.
• CFA is provided irrespective of the size of the inverter installed. It is computed on the rated DC capacity of the module system, not inverter capacity. The inverter must still meet the scheme’s technical specification.
• No CFA goes to non-residential segments, including commercial and industrial consumers.

Two consequences follow. A higher quote does not produce higher assistance, because the benchmark is fixed. And Section 15(2)(e) of the CGST Act excludes Central and State Government subsidies from the value of supply, so assistance never enters the supplier’s taxable value.

Does the benchmark include GST? The MNRE guidelines state the benchmark as ₹50,000 and ₹45,000 per kW and do not say whether it is GST-inclusive. The same guidelines do say that a vendor doing additional, site-specific work can raise a separate invoice including GST in addition to the standard plant cost. We therefore do not state either way, and you should not assume the benchmark absorbs the tax. Read your own contract: it should show the GST line explicitly.

You pay tax on the full invoice, then receive assistance separately if every scheme condition is met. Eligibility, timelines, and state top-ups vary by State and DISCOM, and nothing here guarantees an outcome. Our guide to the PM Surya Ghar subsidy amount walks the slabs.

Input tax credit: who can claim, who cannot

Residential buyers should assume they cannot. Credit runs through GST registration, which most households do not hold, and Section 17(5)(g) of the CGST Act separately blocks credit on goods used for personal consumption. Treat the tax as capital cost.

An inverter dealer deciding whether the business must register, rather than how a product is classified, should use the separate GST and Udyam registration checklist. It keeps tax registration, MSME registration, and partner application status distinct.

Commercial and industrial buyers face four tests, in this order.

1. Section 16. Registration, a valid tax invoice, receipt of the goods, and tax actually paid.
2. Section 17(1). Where goods serve business and non-business purposes, credit is restricted to the business portion.
3. Section 17(5)(c) and (d). Credit is blocked on construction of an immovable property, by works contract or on your own account. Both clauses carve out plant and machinery.
4. Section 17(2). Where inputs serve taxable and exempt outward supplies, credit is restricted to the taxable portion.

The carve-out in test 3 is defined. The Explanation in Chapter V says plant and machinery means apparatus, equipment, and machinery fixed to earth by foundation or structural support, used for making outward supply. It excludes land, buildings, and civil structures.

Test 4 is the one C&I buyers miss. A plant feeding your own taxable manufacturing is a different analysis from one whose output is sold as electricity. Apply Section 17(2) to your outward supply mix before modelling credit into a payback figure.

One more rule catches people combining reliefs. Section 16(3) blocks credit on the tax component of capital goods where depreciation has been claimed on that component under the Income-tax Act, 1961. Pick one treatment, not both. See accelerated depreciation and the guide to solar inverter depreciation, then our commercial and industrial solutions page.

Imported equipment: a different tax stack

An imported inverter or module carries customs duty and IGST at the border before it reaches a domestic invoice. The classification logic is the same, but the importer also deals with basic customs duty and the assessable value. Our import duty on solar inverters guide covers that stack. A dealer who imports and resells should show the domestic GST on the resale invoice as a separate line, so the buyer’s document still follows the entry-and-HSN checks above.

What a compliant GST invoice must show

Rule 46 of the CGST Rules, 2017 sets the particulars. Check the supplier’s document against the rule, not an online template.

Two solar-specific points. The proviso to Rule 46 lets CBIC notify how many HSN digits a supplier must show, and Notification 78/2020-Central Tax dated 15 October 2020 sets 4 digits for annual turnover up to ₹5 crore and 6 digits above it, according to GSTN (2022). An unregistered recipient’s name and delivery address must appear once the taxable value reaches ₹50,000.

Then do the boring check. Put the accepted quote next to the final invoice. Model numbers, quantities, descriptions, and HSN codes should match.

Myths and mistakes that keep showing up in quotes

Two claims survive that the notification does not support. First, that all solar is 5%, so the whole quote is 5%. Entry 437 is about described goods, not an industry, and a bundled installation triggers the 70:30 Explanation. Second, that solar equipment is 12%, which was the position in the period that closed on 21 September 2025.

Below those sit eight practical errors.

1. Buyers comparing a tax inclusive quote against a tax exclusive one.
2. Buyers netting an assumed subsidy off the invoice before computing tax.
3. Buyers assuming a residential input tax credit exists.
4. Buyers accepting a blank HSN column, then never checking the invoice against the signed quote.
5. Installers reusing an eight-digit HSN across differently described products.
6. Installers applying the 70:30 split to a plain equipment sale.
7. Installers applying the goods rate to a bundle when serial 38 services are in scope.
8. Installers treating an IGST entry as authority for an intra-State invoice.

All eight are cheaper to fix at quotation than at assessment.

What to watch for next

• Further amendments. Corrigenda and amendments to Notification 9/2025 and to the services notification 11/2017-Central Tax (Rate), which was last amended for this entry on 17 September 2025.
• Rulings on standalone inverters. Advance rulings on whether a given inverter is a solar power based device will settle more than any article can.
• MNRE’s benchmark revision. The guidelines say benchmark cost will be revised at the scheme’s midterm review, or earlier on a substantial rise in module prices.
• Inverted duty refunds. Goods at 5% with inputs at 18% creates an inverted duty structure. Confirm your refund route with your adviser.

Keep the datasheet with the quote. Our hybrid inverter range carries the descriptions a supplier should be quoting from.

The Bottom Line

GST on solar inverters is a description question dressed up as a rate question. The 5% entry is real and took effect on 22 September 2025. It is not automatic for a static converter in heading 8504.

Three things to do next:

• Write an entry number next to every tax line on your quote. If a line cannot be traced to entry 437, entry 477, or a service entry, ask which provision was used.
• Then have a tax adviser confirm classification and input tax credit against your own facts, in writing, before you release payment.
• Contact Qbits for the equipment description and model details that belong on a Qbits quote, then take that description to your adviser.

Sources checked. Notification 9/2025-Integrated Tax (Rate), 17 September 2025, entries 437, 438, and 477. Notification 11/2017-Central Tax (Rate), serial 38. CGST Act, 2017, sections 15(2)(e), 16(3), and 17. Notification 15/2025-Central Tax (Rate), 17 September 2025, amendment to serial 38 of 11/2017-Central Tax (Rate). Timeline of earlier rates: TaxGuru. PM Surya Ghar guidelines, MNRE document host, uploaded July 2025. Rule 46, CGST Rules, 2017, and Notification 78/2020-Central Tax, via CBIC and GSTN. PIB, 17 September 2025 and PIB, 29 February 2024, MNRE. MNRE operational guidelines. Reviewed 14 October 2026.