GST

GST on solar projects: goods, EPC and 70:30 deemed valuation

Reviewed by CA Nikhil Gupta - source checked for this batch on 1 October 2026

Solar GST turns on contract structure. A standalone sale of eligible renewable-energy goods is not the same as an EPC or works-contract supply, and the 70:30 deemed valuation rule was introduced to handle bundled project contracts.

Primary source trail

The current analysis should be checked against rate notifications, GST Council materials and any project-specific advance ruling or contract split.

Goods-only supply

Solar modules, specified devices or parts may fall in goods rate entries when supplied as goods.

EPC or works contract

Installation, civil work, design, commissioning and other services can change valuation and classification.

70:30 formula

Council materials explain the deemed split for specified renewable-energy project contracts: 70 percent goods component and 30 percent service/other component.

Contract evidence

PO wording, BOQ, milestones, ownership transfer, installation scope and invoicing decide the working.

Bare law and source decode

GST classification depends on whether the supply is goods, service, composite supply or works contract.
GST Council agenda material records the 70:30 deemed value mechanism for solar and wind projects introduced to reduce classification disputes.
The goods-side concessional treatment cannot be assumed for every inverter, battery, mounting structure, cabling or civil item sold separately.
Separate contracts can still be examined for artificial splitting if commercial reality shows one bundled supply.
Advance rulings help understand risk but bind only the applicant and jurisdictional officer in the statutory sense.

Workflow

Collect contract, purchase order, BOQ, technical scope, invoicing plan and commissioning obligations.

Classify each supply: module/device/part, standalone accessory, civil work, installation service, O&M or EPC.

Check whether the 70:30 renewable-energy project valuation applies to the contract facts.

Reconcile HSN/SAC, rate, invoice split, e-way bill, work completion certificate and GSTR-1 reporting.

Keep rate notification, Council material and legal memo with the project file.

Practical examples

Sale of solar modules from a distributor can be a goods-rate question with HSN evidence.
A turnkey rooftop project with design, material, installation and commissioning needs composite/EPC review.
A separate battery supply may not automatically inherit the solar generating-system rate if sold independently.

Highlighted points

Do not apply 5 percent to every project line item without classification support.
Do not ignore works-contract treatment for immovable-property/civil components.
Do not rely on the invoice split if the contract and execution tell a different story.
Keep change orders and O&M invoices separate from original EPC tax treatment.

Exam and advisory case study

Exam case: A contractor invoices the whole project at the lower goods rate, but the contract includes civil foundation, installation and commissioning. The answer requires contract classification and valuation, not a single rate table lookup.

Finin2min Summary

Solar GST is a contract-file exercise. The safest file has BOQ classification, rate notification support, 70:30 analysis where relevant, and reconciliation across invoice, e-way bill and return reporting.

Q&A

Is every solar project taxed at one rate?

No. Goods-only supply, EPC, works contract and separate services can have different treatment.

What does 70:30 mean?

It is a deemed valuation split used for specified renewable-energy project supplies where goods and services are bundled under the relevant notification framework.

What should be preserved?

Contract, BOQ, rate note, invoices, e-way bills, completion certificate and return reconciliation.