GST on solar installation: CGST+SGST or IGST? A place of supply guide

GST on solar installation is charged as CGST plus SGST when a sale stays inside one state. It is charged as IGST when the sale crosses a state line. Every rooftop invoice has to pick one, and the pick depends on two locations: where you are registered and the place of supply. The place of supply is where the law says the sale happens. For an installed solar system, that is the installation site.

This guide covers why GST on solar installation follows the site and what changes when your company sits in one state and the roof in another. It also covers what the invoice must show and where input credit goes wrong. It is general information, not tax advice, so confirm how your contracts are treated with your CA. The statutes, rules and circulars were checked on the CBIC and GST Council sites on 5 November 2026.

GST on solar installation: supplier location versus place of supply

The IGST Act compares two locations. Under Section 7, a supply of goods is inter-State when the supplier's location and the place of supply are in different States or Union territories. Under Section 8, it is intra-State when both are in the same State or Union territory. Sections 7(3) and 8(2) apply the same test to services. One test therefore governs GST on solar installation, whether you bill goods or work. Inter-State supplies attract IGST.

Your location is the easy half. It is the state of the registered place of business you invoice from. The first two characters of a GSTIN are the state code, as CBIC's registration rules set out. For services, Section 2(15) of the IGST Act defines the supplier's location as the registered place of business the supply is made from, or a fixed establishment elsewhere.

The place of supply causes the mistakes, because it can differ from both your address and the customer's. GST is a destination-based consumption tax. CBIC wants the tax to reach the state where consumption happens (Circular 90/09/2019-GST). For an installed system, that is the site.

Why the installation site decides the place of supply

Two provisions of the IGST Act decide the place of supply for GST on solar installation. Which one applies depends on how the contract is built.

For goods, Section 10(1)(d) covers goods assembled or installed at site. The place of supply "shall be the place of such installation or assembly." If your invoice supplies panels, inverters and structures that you then install, this clause applies.

For services, Section 12(3)(a) covers services "directly in relation to an immovable property". The place of supply is where that property "is located or intended to be located". The CGST Act defines a works contract in Section 2(119) as a contract for building, construction, erection, installation or commissioning of immovable property where property in goods is transferred. Whether your turnkey rooftop contract counts as goods, a works contract or a mix is a question for your CA. For the installation itself, the site decides under either provision.

A home customer is usually not registered for GST, which brings one more rule. Since 1 October 2023, Section 10(1)(ca) has covered goods sold to an unregistered person. The place of supply is the location of the address recorded on the invoice, or your own location if no address is recorded. Recording only the State name counts as recording the address. Circular 209/3/2024-GST of 26 June 2024 adds that when the billing and delivery addresses differ, the delivery address decides. Clause (ca) overrides clauses (a) and (c), and the circular does not mention clause (d). Write the site address and its state on every rooftop invoice, and every clause points to the same state.

A company registered in one state, a site in another

Take a hypothetical installer registered in Maharashtra (GSTIN state code 27). Where the site is decides GST on solar installation:

The last two rows trip people up, because the buyer's GSTIN names one state and the roof stands in another. The tax follows the site. What that does to the buyer's credit depends on where the buyer is registered. Settle it with the buyer and their CA before you invoice.

Two supplier-side questions also belong with your CA. A site office or stored material in the other state may raise the question of registering there. A fixed establishment elsewhere can change your location under Section 2(15).

What to show on the invoice

Rule 46 of the CGST Rules lists what a tax invoice must carry (current text on the CBIC tax portal). These particulars carry the state logic.

Circular 90/09/2019-GST tells every registered person making an inter-State supply to state the place of supply with the State name. Writing it on intra-State invoices too costs nothing.

In SolarERP, the invoice and quotation screens have a Place of supply field. It starts from the customer's GSTIN or state, and you can change it to the state where the system is installed. The software compares that state with your company's state, taken from your GSTIN or from Settings, and picks CGST + SGST or IGST. If either state is missing, it falls back to CGST + SGST, so read the hint under the GST type before you send. Proposals use the same rule. The software does not file GST returns. The billing and finance module and the Solar EPC module cover the rest.

Mistakes that leave a customer without input credit

A home customer cannot claim input credit, so GST on solar installation causes credit problems mainly on commercial jobs and on your own purchases. Section 16(2) of the CGST Act sets the conditions. Among them: the buyer holds a tax invoice from a registered supplier, the supplier has furnished the invoice details in its outward supplies statement, the goods or services were received, and the tax was actually paid to the Government.

• Tax charged by the head office state instead of the site state. Section 77 of the CGST Act and Section 19 of the IGST Act allow a refund of tax paid under the wrong head. Circular 162/18/2021-GST of 25 September 2021 says the refund is open whether you find the error or an officer does. The condition is that you pay the required tax in the correct head. So you pay the right head first and claim the wrong one back. The circular also quotes a time limit under Rule 89(1A), so check the current rule.
• A mistyped buyer GSTIN. Section 16(2)(aa) requires the invoice details to be communicated to the recipient. An invoice reported under the wrong GSTIN does not reach the buyer who needs it.
• Invoices raised but not reported. The same clause makes your customer's credit depend on you furnishing the invoice in your outward supplies statement. A late or missing report holds up their claim.
• Your own purchases judged by the site. Suppose your supplier ships panels straight to a site on your direction. Section 10(1)(b) treats you as the recipient and puts the place of supply at your principal place of business. The site's state does not apply to the supply you bought. Section 16(2) also deems you to have received goods delivered to another person on your direction. The receipt condition therefore holds even though the goods go to the site.

This guide quotes no rates for GST on solar installation on purpose. Rates change, and the rate on an invoice depends on its date and on what the line is. Check each line on the CBIC GST rates page and ask your CA before you fix a rate in a quotation.