Correct GST Structure for Solar Business in India

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GST Calculation in Solar EPC Business:

For solar EPC or project supply contracts, GST is applied through a 70:30 valuation rule:

• 70% of the contract value is treated as goods → taxed at 5% GST
• 30% of the contract value is treated as services → taxed at 18% GST

This results in an effective GST of 8.9% on the total contract value.

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Example Calculation

For an invoice of ₹1,00,000:

• 70% of ₹1,00,000 = ₹70,000 @ 5% = ₹3,500
• 30% of ₹1,00,000 = ₹30,000 @ 18% = ₹5,400

Total GST = ₹8,900 (Effective 8.9%)

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To manage this in Swipe, we request you to please follow the steps mentioned in the article below:

How to create an invoice for a solar business in India?

To manage solar business in India, we request you to please follow the steps mentioned below: Step 1: Please add the required item in the Products and Services section. For example, I have added Solar Panels. [image] Step 2: Add the Services which you provide as well. For example, I have added installation services. [image] Step 3: Go to Sales invoices, and add the Products and Cretae Invoice. [image]

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Important Note

• Applying a flat 8.9% GST on the total invoice is incorrect and non-compliant, as this rate does not exist under GST law. Using this approach for billing or filing may lead to compliance issues, including penalties or input tax credit mismatches.
• The 8.9% figure should only be used for estimation or comparison purposes, not for actual invoicing or GST returns.
• If any software applies a flat 8.9% GST directly on invoices, it may not be GST-compliant. It is advisable to consult a Chartered Accountant before using such methods or software to ensure proper compliance.

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