Getting CGST, SGST, and IGST right isn’t optional — here’s how to avoid the most common mistakes.
A solar proposal is more than a document showing system size and price.
For a professional solar installer, the proposal also needs to clearly communicate what the customer is buying, how the supply is classified, what GST applies, and how much the customer will actually pay.
This becomes particularly important when a quotation includes solar modules, inverters, mounting structures, cables, installation, commissioning, transportation, and other services.
One incorrect GST assumption can change the final customer price, create accounting problems, or result in an invoice that doesn’t match the proposal.
For solar businesses, GST compliance should therefore be treated as part of the sales process, not something that is checked only after the customer has accepted the quotation.
What Are CGST, SGST and IGST?
Before looking at solar-specific examples, it’s important to understand the three main GST components.
CGST — Central Goods and Services Tax
CGST is the Central Government’s component of GST on an applicable intra-State supply.
For example, if a solar installer in Madhya Pradesh supplies an eligible taxable product or service to a customer in Madhya Pradesh, CGST may apply along with SGST.
SGST — State Goods and Services Tax
SGST is the State Government’s component of GST on an applicable intra-State supply.
So, for an intra-State transaction:
GST = CGST + SGST
CBIC explains that CGST and SGST are applicable to intra-State supplies, with the respective central and state authorities administering their portions.
IGST — Integrated Goods and Services Tax
IGST generally applies to inter-State supplies.
For example:
Solar company registered in Maharashtra → customer/supply in Madhya Pradesh
The applicable tax treatment may involve IGST rather than separately charging CGST and SGST.
CBIC describes IGST as the tax levied on inter-State supplies of goods and services.
Why Does This Matter in a Solar Proposal?
Imagine your salesperson prepares this quotation:
5 kW Solar System — ₹3,00,000
But the proposal doesn’t clearly explain whether this amount is:
- Before GST
- Including GST
- Including installation
- Including transportation
- Including applicable components
- Subject to additional taxes
The customer may interpret the number as the final payable amount.
Later, when the invoice arrives, the customer sees a different total.
That creates a very avoidable problem:
“Why is my final price higher than the quotation?”
Clear GST presentation prevents this confusion.
Solar GST Is Not Simply “5% on Everything”
This is one of the most important points for installers.
Certain renewable-energy devices and specified photovoltaic cells are covered under concessional GST provisions. However, not every component used in a solar installation automatically receives the same treatment.
CBIC’s current rate schedule lists renewable-energy devices including solar power-based devices, solar power generators and photovoltaic cells under the relevant entry, while other products can fall under their own tariff classifications.
For example, CBIC specifically states that solar panel mounting structures made from iron/steel or aluminium fall under headings 7308 or 7610 and attract 18% GST.
That means an installer should not build a proposal around the assumption:
“Everything in a solar system = 5% GST.”
The actual treatment depends on the nature and classification of the supply.
What About Solar EPC / Installation Contracts?
This is where solar GST becomes particularly important.
A solar project can involve a combination of:
- Solar modules
- Inverters
- Mounting structures
- Cables
- Junction boxes
- Protection equipment
- Engineering
- Installation
- Testing
- Commissioning
- Civil work
- Transportation
- Other services
Historically, GST authorities have dealt with solar project supplies using specific provisions and valuation mechanisms.
CBIC’s clarification on renewable-energy projects describes a mechanism under which, where specified renewable-energy goods are supplied together with other goods and services in the relevant circumstances, 70% of the gross value is deemed to be the value of specified goods and 30% the value of taxable services for the applicable GST treatment.
This is why installers should be careful before simply applying one GST rate to a large EPC contract.
The correct treatment depends on the structure and classification of the particular supply and the applicable notification/circular.
Example: Intra-State Solar Sale
Suppose your company and customer are located in the same State and the applicable taxable supply attracts GST at a total rate of 18%.
For illustration:
Taxable value: ₹2,00,000
GST @ 18%: ₹36,000
The GST may be presented as:
- CGST @ 9% = ₹18,000
- SGST @ 9% = ₹18,000
Total invoice value
₹2,36,000
The important point is that CGST and SGST together make up the applicable GST rate for the intra-State supply.
Example: Inter-State Solar Sale
Now suppose the supply is treated as an inter-State supply and the applicable GST rate is 18%.
Taxable value: ₹2,00,000
IGST @ 18%: ₹36,000
Total
₹2,36,000
Instead of:
CGST ₹18,000 + SGST ₹18,000
the invoice would show:
IGST ₹36,000
The distinction between intra-State and inter-State supply is therefore essential.
Don’t Confuse GST Rate With GST Component
This is a common mistake in proposals.
Suppose the applicable GST rate is 18%.
For an intra-State supply:
18% GST = 9% CGST + 9% SGST
For an inter-State supply:
18% GST = 18% IGST
The customer should not be charged:
18% CGST + 18% SGST
That would effectively become 36% GST.
Your quotation software should calculate the components automatically.
HSN and SAC Codes Matter
GST compliance isn’t just about calculating the percentage.
Your proposal and tax invoice may also need appropriate classification details, including applicable HSN/SAC information.
Solar businesses frequently deal with multiple types of supplies.
For example:
| Item | Classification consideration |
|---|---|
| Solar modules / PV cells | Applicable HSN classification |
| Inverter | Applicable electrical-equipment classification |
| Mounting structure | Depends on material and classification |
| Installation service | Applicable service classification |
| Engineering services | Applicable SAC |
| Maintenance | Applicable service classification |
| Transportation | Applicable classification depending on arrangement |
Don’t assign one generic code to an entire solar project simply because it is a “solar system.”
The correct classification should be determined based on the actual supply and applicable GST rules.
Why Mounting Structures Need Special Attention
Mounting structures are a good example of why installers need to look beyond the word “solar.”
The structure may be an essential part of a solar installation, but that doesn’t automatically mean it receives the same GST treatment as the solar device itself.
CBIC’s GST FAQ specifically states that structures of iron or steel under heading 7308 and aluminium structures under heading 7610 attract 18% GST.
So if your quotation contains:
- Solar modules
- Inverter
- Mounting structure
- Installation
you shouldn’t automatically apply the same GST rate to every line without checking the applicable classification and the nature of the overall supply.
Five Common GST Mistakes in Solar Proposals
1. Showing a Price Without Saying “Including GST”
A proposal saying:
5 kW Solar System – ₹2,50,000
is incomplete from a customer’s perspective.
Instead, clearly state whether the amount is:
₹2,50,000 + applicable GST
or
₹2,50,000 inclusive of applicable GST
This small distinction can prevent major confusion.
2. Applying 5% GST to Every Solar Component
Solar projects contain many different products and services.
Not every component automatically falls under the same concessional treatment.
For example, CBIC specifically identifies mounting structures under headings that attract 18% GST.
Your proposal system should therefore calculate GST based on the applicable classification rather than using:
Solar = 5%
as a universal rule.
3. Mixing CGST, SGST and IGST
A proposal should know whether the transaction is intra-State or inter-State.
For an intra-State supply:
CGST + SGST
For an inter-State supply:
IGST
Your sales team shouldn’t manually decide this every time.
The billing system should derive the tax treatment from the relevant supplier/customer and place-of-supply information.
4. Forgetting GST When Calculating Customer Financing
Suppose your salesperson calculates:
System price = ₹3,00,000
and then tells the customer:
“Your EMI will be based on ₹3 lakh.”
But the final taxable invoice becomes ₹3.54 lakh after applicable GST.
The customer now has a completely different financing requirement.
GST should therefore be included in the financial calculation shown to the customer wherever applicable.
5. Using Old GST Rules or Templates
GST notifications and interpretations can change.
A proposal template created several years ago may no longer accurately reflect the current tax treatment.
This is particularly important in solar because the industry has had specific GST provisions, clarifications and disputes concerning renewable-energy equipment and EPC contracts.
Your finance or tax team should periodically review:
- GST rate notifications
- CBIC circulars
- GST Council recommendations
- HSN classifications
- Relevant judicial/AAR developments
- Current invoicing requirements
Build GST Into Your Solar Proposal Software
If you are using a CRM or solar sales platform, GST should not be a manually typed field.
Your proposal calculator should ideally have fields such as:
Customer Information
- Customer State
- Customer GSTIN, where applicable
- Billing address
- Installation address
- Place-of-supply information
Product Information
- Product name
- HSN
- Quantity
- Unit price
- Tax category
- GST rate
Tax Calculation
- Taxable value
- CGST
- SGST
- IGST
- Total GST
- Final invoice value
This significantly reduces manual calculation errors.
A Better Solar Proposal Format
Instead of simply showing:
Solar System: ₹3,00,000
use a structure such as:
| Description | Amount |
|---|---|
| Solar system / project value | ₹X |
| Applicable GST | ₹X |
| CGST | ₹X |
| SGST | ₹X |
| IGST | ₹X |
| Total project value | ₹X |
Only the relevant tax components should be populated.
For example, an intra-State transaction would show CGST and SGST, while an applicable inter-State transaction would show IGST.
Keep GST Separate From Subsidy
This is especially important for residential solar proposals involving government subsidy schemes.
GST and subsidy are not the same thing.
A customer may be eligible for a government subsidy, while GST is determined separately according to the applicable supply and tax rules.
Your proposal should therefore clearly distinguish:
Base Project Cost
↓
Applicable GST
↓
Gross Project Cost
↓
Eligible Subsidy / CFA
↓
Customer’s Estimated Net Contribution
Don’t simply reduce the quotation price and label the remaining amount “after GST and subsidy.”
Customers should be able to see exactly how each figure was calculated.
GST and Input Tax Credit
For registered solar businesses, GST also affects procurement.
Your company may purchase:
- Solar modules
- Inverters
- Cables
- Structures
- Electrical equipment
- Tools
- Professional services
- Logistics services
Depending on the nature of the supply and applicable conditions, input tax credit may be relevant.
This is one reason why installers shouldn’t look at GST only as an amount added to the customer’s invoice.
It can also affect the company’s:
Purchase cost → Input tax → Output tax → Cash flow → Project margin
A proper accounting process is therefore essential.
The GST framework generally allows eligible input taxes to be used as set-off subject to the applicable conditions and restrictions.
GST Can Affect Your Actual Project Margin
Consider two solar projects that appear identical from a sales perspective.
Project A
Quoted price:
₹5,00,000
Project B
Quoted price:
₹5,00,000
If the underlying tax treatment, classification, input credits, or supply structure differs, the company’s actual margin may not be identical.
That’s why your sales team, procurement team, project team and accounts team should work from the same quotation data.
A good solar CRM should connect:
Lead → Proposal → Tax Calculation → Order → Invoice → Payment
rather than calculating each stage independently.
A Simple GST Checklist for Solar Installers
Before sending a proposal, check:
Customer
- Customer state confirmed
- Billing address confirmed
- Installation location confirmed
- GSTIN captured where applicable
- Place-of-supply treatment reviewed
Products
- Correct HSN/SAC classification
- Correct GST rate
- Components reviewed individually where necessary
- Mounting structure classification checked
- Installation/service component checked
Tax
- Intra-State vs inter-State determined
- CGST/SGST or IGST applied correctly
- GST calculated on the correct taxable value
- Rounding checked
- Total invoice value verified
Proposal
- Price clearly marked as inclusive/exclusive of GST
- GST shown separately
- Subsidy shown separately
- Customer’s final estimated contribution clearly displayed
- Terms and conditions included
Make GST a Part of Your Sales Process
GST shouldn’t be something the salesperson discovers after the customer says:
“Yes, let’s go ahead.”
It should already be built into the proposal.
A strong sales process looks like:
Lead
↓
System Design
↓
Component Selection
↓
Tax Classification
↓
GST Calculation
↓
Subsidy Calculation
↓
Final Proposal
↓
Customer Approval
↓
Tax Invoice
This approach reduces surprises and creates a much more professional customer experience.
Final Thoughts
GST compliance may seem like an accounting issue, but for solar installers it directly affects pricing, proposals, margins, customer trust and invoicing.
The biggest lesson is simple:
Don’t treat “solar” as one single GST category.
Different goods and services within a solar project can have different classifications and tax treatments. CBIC’s current rate information, for example, distinguishes renewable-energy devices from items such as mounting structures.
Before sending a proposal, make sure your team has correctly determined:
- What is being supplied?
- How is it classified?
- What GST rate applies?
- Is the supply intra-State or inter-State?
- Should the invoice show CGST + SGST or IGST?
- Is the quoted price GST-inclusive or exclusive?
- How does GST interact with the project’s overall pricing and subsidy presentation?
Most importantly, don’t rely on an old spreadsheet or a salesperson’s memory for tax calculations.
Build GST rules into your proposal and billing workflow, and have your tax/accounting professional verify the treatment for your specific contracts and current regulations.
That small process improvement can prevent expensive mistakes later.
