Taxability on sale of solar panel and its installation services

[AKSHAT AGARWAL]

What is rate of GST on sale of solar panel and related product when the same has been sold independently without providing installation services of such solar panel. And tax invoice for sale of solar panel and related product is issued only.

Or

What is rate of GST on sale of solar panel and related product when the same has been sold including providing installation services of such solar panel. However tax invoice for sale of solar panel and its installation services is issued separately.

Or

What is rate of GST on sale of solar panel and related product when the same has been sold including providing installation services of such solar panel. However tax invoice for sale of solar panel and its installation services is issued singly.

[YAGAY andSUN]

When dealing with the sale of solar panels and related products under GST, the tax rate depends on whether or not installation services are provided, and how the invoice is structured. Let’s break down the three scenarios you mentioned:

Scenario 1: Sale of Solar Panel and Related Products Without Installation Services (Separate Invoice for Products Only)

• Nature of Sale: If you are selling solar panels and related products without installation services, and you issue an invoice only for the sale of the products (solar panels and related accessories), then GST will apply only on the sale of the products.

• GST Rate:

  • Solar panels and solar cells are generally subject to 5% GST (with full ITC available).

  • Related products like inverters, batteries, and other components typically attract 18% GST (unless specifically exempted).

Thus, in this case:

• Solar panels and solar cells (5% GST)

• Other related products like batteries, inverters, cables, etc., (18% GST)

Scenario 2: Sale of Solar Panel and Related Products Including Installation Services (Separate Invoices for Products and Services)

• Nature of Sale: When both the sale of solar panels and related products and the installation services are provided, but the invoices are issued separately for the products and services, the GST treatment depends on how the services are classified.

• GST Rate on Solar Panels:

  • As mentioned, solar panels typically attract 5% GST.

• GST Rate on Installation Services:

  • Installation of solar panels generally qualifies as a composite supply under GST. When both products and services are sold together, installation services for solar panels are typically taxed at 5% as well (since the solar panel is the principal supply).

  • However, if the installation service is provided separately (via a separate invoice), GST on the service would still generally be 5%, as it is considered an integral part of the supply of solar panels.

So in this case:

• Solar panels (5% GST)

• Installation services (5% GST)

Scenario 3: Sale of Solar Panel and Related Products Including Installation Services (Single Invoice for Both Products and Services)

• Nature of Sale: When solar panels and installation services are provided together, and the invoice for both products and services is issued as a single invoice, the whole supply (solar panels + installation) will be treated as a composite supply, where the principal supply is the solar panel.

• GST Rate:

  • As per the GST provisions for solar products, when solar panels are provided with installation services, the entire composite supply is subject to 5% GST, because the principal supply (solar panels) is taxed at 5%.

  • Installation services, in this case, do not attract a higher GST rate on their own. They fall under the same 5% GST rate because they are part of the principal supply (solar panels).

So, for the combined supply:

• Total GST on the solar panel and installation services: 5% GST (on the whole supply).

Summary of GST Rates for Each Scenario:

1. Sale of Solar Panels and Related Products (No Installation):

   • Solar panels: 5% GST

   • Other related products (e.g., inverters, batteries): 18% GST

2. Sale of Solar Panels and Related Products with Separate Invoices for Products and Installation Services:

   • Solar panels: 5% GST

   • Installation services: 5% GST

3. Sale of Solar Panels and Related Products with Combined Invoice for Products and Installation Services:

   • Solar panels + installation services: 5% GST on the entire supply (composite supply)

Important Points:

• ITC: The Input Tax Credit (ITC) for the GST paid on solar panels and related products is available, but ensure the product is used for business purposes.

• Composite Supply: If the installation is integral to the sale of solar panels, the entire supply is treated as a composite supply, and the GST rate will be determined by the principal supply, which is usually the solar panel.

Note: Please also do consult with your GST Consultant before taking any action on this matter.

[Shilpi Jain]

First case - rate applicable to the goods.

2nd case - if the 2 contracts / POs are not independent then there is no difference between 2nd case and 3rd case. Accordingly the deemed valuation of 70% 30% as given in rate notification has to be adopted.

Note: This valuation as per notification is under challenge and in my view will not stand the test of law.

[AKSHAT AGARWAL]

So Ma'am what will be the effective rate of tax in 2nd and 3rd case. What HSN will be used for the same. 

Thanks

[Shilpi Jain]

Entry 201A of Notification No. 1/2017-Central Tax (Rate) and entry S. No. 38 of the Table mentioned in the Notification No. 11/2017-Central Tax (Rate)

Goods 70% - 12%

Services 30% - 18%

[AKSHAT AGARWAL]

Thanks Ma'am for your prompt reply.

AI Summary

Solar Panel Sales: GST Rates Vary from 5-18% Based on Product Type, Installation, and Invoice Structure A discussion forum explores GST taxation for solar panel sales across three scenarios: standalone product sales, separate invoices for products and installation, and combined invoice for products and installation. The key findings indicate varying GST rates ranging from 5% to 18% depending on product type, installation services, and invoice structure. Participants emphasize the importance of understanding composite supply principles and consulting tax professionals for precise guidance.