The government has reduced the GST on solar panels and eco-friendly products from 12% to 5%, effective September 22, 2025. This will make solar systems, hydrogen vehicles, and wind energy equipment more affordable, thereby making clean energy accessible to common people and providing relief in electricity bills.
GST on Solar Panels: The government has announced the implementation of a 5% GST on solar panels and other eco-friendly products from September 22, 2025, making systems that were previously taxed at 12% now more affordable. This move will make solar systems, solar cookers, water heaters, windmills, and hydrogen fuel cell vehicles more accessible to the public. According to experts, this will help bring clean energy to every household and provide relief in electricity bills. Although taxes on raw materials remain high, efforts will be made to reduce them by expediting the refund system.
Prices of Everything from Solar Panels to Hydrogen Vehicles to Come Down
The government has reduced taxes not only on solar panels but also on several other environmentally friendly products. These include solar cookers, solar lanterns, solar water heaters, photovoltaic cells, and solar power generators. Additionally, windmills, waste-to-energy plants, devices that generate electricity from sea waves, and hydrogen fuel cell-powered vehicles will now be available at a mere 5% GST. Previously, these products were taxed at 12%.
Consumers will directly benefit from this tax reduction. People will now be able to easily purchase solar systems and eco-friendly products.
Savings on Solar Systems
Suppose an individual is installing a solar system worth ₹80,000. Previously, due to the 12% tax, they had to incur an additional expense of ₹9,600, making the total cost ₹89,600. Now, with the tax reduced to 5%, only ₹4,000 will be levied as tax, and the total cost will be ₹84,000. Thus, common people can achieve direct savings of up to ₹5,600. However, this is only possible if companies pass on the full benefit of the tax reduction to the customers.
Taxes on Raw Materials Still High
Although customers will get relief, taxes on raw materials remain high for companies. The material used to manufacture solar systems continues to be taxed heavily, similar to before. This system, where finished goods have lower taxes and raw materials have higher taxes, is called an inverted duty structure. This causes companies' funds to remain held up with the government. The government has acknowledged this could be a problem, but the refund system already exists and will now be expedited to ensure companies receive their money promptly.
GST System Now Simplified
The government has also simplified the GST structure. Previously, there were four slabs – 5%, 12%, 18%, and 28%. Now, there will be only two main slabs – 5% and 18%. This will lead to a reduction in the prices of everyday items such as butter, ghee, soap, shampoo, TVs, and refrigerators. A separate 40% tax will continue to apply to expensive and luxury goods.
This change is expected to bring relief to the middle class and common households. People will now be able to purchase daily necessities and energy equipment more easily.
Promoting Clean Energy
This government move is not limited to just tax reduction. Its aim is also to bring solar energy to every home and provide relief in electricity bills. If companies fully pass on the tax benefits to customers, solar systems will no longer be confined to cities. People in rural areas will also be able to benefit.
The affordable prices of solar panels and other eco-friendly products will promote the use of clean energy. People will be more attracted to clean energy sources like solar, wind, and solar. This step will also advance the country's clean energy goals.
The Dream of Solar Energy for Every Home
The government's endeavor is to enable every household to install a solar system. This will not only reduce electricity bills but also decrease pollution. With the tax reduction, clean energy will become an affordable, accessible, and attractive option for people. In the coming times, its widespread impact is expected to increase the use of clean energy.
