GST 2.0 Reform: If You’re Thinking of Installing Solar Panels, Now Is the Right Time to Save Big Money

Sep 11, 2025

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India is entering a new era of clean energy with the GST 2.0 reform. The government’s recent announcement to cut the Goods and Services Tax (GST) on solar panels and other renewable energy products is a major step in making green power affordable. With the new rates under GST 2.0, this is the perfect time for homeowners, businesses, and industries to switch to solar power and slash their electricity bills.

Key Highlights of GST 2.0 Reform for Solar Panels

Particulars	Earlier Rate	New Rate under GST 2.0	Impact on Consumers
GST on Solar Panels / Solar Cells / Modules	12%	5%	Lower upfront cost for rooftop installations
GST on Wind Turbines, Biogas Plants, Waste-to-Energy Systems	12%	5%	Cheaper renewable energy infrastructure
Approximate Project Cost Reduction	–	~5%	Faster return on investment (ROI)

Why This Matters for You

1️⃣ Lower Upfront Cost

Under GST 2.0, the tax rate on solar panels has dropped from 12% to 5%. For example, a system that previously cost ₹89,600 (including tax) will now cost about ₹84,000 – saving you more than ₹5,000 instantly.

2️⃣ Reduced Electricity Bills

With lower installation costs, more households and businesses will adopt solar energy, cutting their monthly power bills significantly.

3️⃣ Boost to Renewable Adoption

GST 2.0 creates a more favorable environment for green energy adoption across India.

4️⃣ Support for Domestic Manufacturing

The reform aligns with “Make in India” goals, giving a push to local manufacturers of solar cells, panels, and other components.

How Much You Can Save – An Example

System Capacity	Base Price (₹)	Price With 12% GST (₹)	Price With 5% GST under GST 2.0 (₹)	You Save (₹)
1 kW Rooftop System	80,000	89,600	84,000	5,600
3 kW Rooftop System	2,40,000	2,68,800	2,52,000	16,800
5 kW Rooftop System	4,00,000	4,48,000	4,20,000	28,000

(Actual savings depend on supplier pricing and whether full GST benefit is passed on.)

Benefits Beyond Savings

Energy Independence: Reduced reliance on the grid protects you from rising electricity tariffs.
Shorter ROI: Under GST 2.0, payback periods for rooftop solar systems can drop to as low as 3–5 years.
Environmentally Friendly: Every kWh of solar electricity reduces CO₂ emissions and helps combat climate change.

Tips Before You Buy

Check Subsidy Schemes: Many state and central programs offer extra subsidies for rooftop solar installations.
Compare Vendors: Ensure that suppliers pass on the full GST 2.0 benefit.
Look for Warranties: Panels should come with at least 10–15 years product warranty and 25 years performance warranty.

FAQs

Q1. What is GST 2.0 for solar panels?
A: GST 2.0 is the government’s latest tax reform, reducing GST on solar panels, solar cells, and other renewable energy products from 12% to 5%.

Q2. Will my electricity bill drop immediately if I install solar panels?
A: Yes. Once your system is operational, you generate your own electricity and draw less from the grid, lowering your monthly bill.

Q3. Can businesses also benefit from GST 2.0?
A: Absolutely. Commercial and industrial users installing larger solar plants will see even bigger savings.

Q4. What is the payback period for a rooftop solar system under GST 2.0?
A: Depending on location, consumption, and subsidies, the payback period is generally 3–5 years.

Q5. Are wind turbines and other renewables also cheaper now?
A: Yes. GST 2.0 reduces tax on wind turbines, biogas plants, and waste-to-energy systems too.

Q6. Does the GST 2.0 cut affect service and maintenance charges?
A: Primarily the reduction is on equipment, but lower system costs can indirectly reduce your overall project expense.

Q7. Will the price continue to fall in the future?
A: Prices may fluctuate with supply chains, but GST 2.0 provides a direct and immediate reduction right now.

Conclusion

The GST 2.0 reform is a game-changer for renewable energy in India. With lower taxes making solar panels more affordable, there’s no better time to invest in a rooftop system or larger solar project. You’ll enjoy reduced electricity bills, faster payback periods, and the satisfaction of contributing to a cleaner environment.

If you’ve been thinking about going solar, this is the moment to make the switch and save big under GST 2.0.