The renewable energy sector has received a major boost after the GST Council, in its 56th meeting on 3rd September 2025, reduced GST rates on renewable equipment from 12% to 5%.
The decision, in line with Prime Minister Narendra Modi’s vision of a “Good and Simple Tax,” will cut project costs and make clean electricity more affordable.
A 1 MW solar project will now be cheaper by ₹20–25 lakh, while a 500 MW solar park could save over ₹100 crore. Rooftop solar for households will cost ₹9,000–10,500 less, and farmers will save nearly ₹17,500 on a 5 HP solar pump under the PM-KUSUM scheme.
The reform will also reduce renewable tariffs, saving distribution companies ₹2,000–3,000 crore annually. It is expected to boost domestic manufacturing, attract investments, create jobs, and speed up India’s target of 300 GW renewable capacity by 2030.
The new GST rates will be effective from 22nd September 2025.