GST for energy, renewables and solar EPC

A supply of goods, a works contract, or a composite supply with a deemed split. Solar EPC has been all three.

The EPC characterisation

Where a contract supplies a renewable energy device together with installation, the notification prescribes a deemed apportionment between the goods and the service components for specified devices, and the applicable entry and its conditions must be verified for the period.

Where the project results in an immovable structure, the works contract analysis applies with its own rate and credit consequences.

Splitting an EPC contract into supply and services legs survives only where the separation is genuine in scope, risk, consideration and performance; a paper split of a single turnkey obligation does not.

Rooftop and captive installations, and the difference between a supply to a consumer and a build own operate arrangement, change the analysis entirely.

Electricity, transmission and charges

Electricity is outside the GST net in the manner provided, and the transmission or distribution of electricity by a specified utility is exempt, which leaves a generator or distribution licensee with a substantial credit restriction.

Charges recovered alongside electricity — meter rent, application fees, testing charges, shifting charges — have been the subject of clarification and litigation, and each head needs a recorded position.

Capacity charges, deviation settlement, open access and wheeling charges each require analysis, and the answer differs between a generator, a licensee and a consumer.

Renewable energy certificates and carbon credits are separate supplies with their own classification questions.

The controls

A contract characterisation note at the bid stage for every project format, with the applicable entry identified.

A head by head position on every charge recovered alongside electricity.

A Rule 42 and 43 computation reflecting the exempt and non taxable output.

A capitalisation bifurcation for every project, distinguishing plant and machinery from civil structure.

What to do on Monday

1. Write a characterisation note at the bid stage for every project format.

2. Record a position for every charge recovered alongside electricity.

3. Compute Rule 42 and 43 for the exempt and non taxable output mix.

4. Bifurcate project capitalisation between plant and machinery and civil structure.

Questions we are asked on this

How is a solar EPC contract taxed?

By the applicable entry for the period, which for specified renewable energy devices prescribes a deemed apportionment between goods and services. Verify the entry.

Is a split contract structure safe?

Only where the separation is genuine in scope, risk, consideration and performance.

Is credit available to a generator?

Restricted, because electricity is outside the net and transmission or distribution by a specified utility is exempt. Compute the apportionment.

Are meter rent and application fees taxable?

Each head needs a recorded position; the clarifications and litigation on these charges must be applied head by head.

How are renewable energy certificates treated?

As separate supplies with their own classification question. Take a documented position.

In this cluster

• GST for manufacturing: the exposure map
• GST for pharmaceuticals and life sciences
• GST for automotive and auto components
• GST for textiles and apparel
• GST for IT, SaaS and software exports
• GST for logistics, warehousing and transport
• GST for banking, NBFC and financial services
• GST for insurance after the individual policy exemption
• GST for hospitality, hotels and travel
• GST for education and edtech

GST Insights is published by AMLEGALS for general information. Law stated as on 3 September 2026. Not advice on any particular set of facts; not an advertisement or a solicitation under Rule 36 of the Bar Council of India Rules. Readers with a question on their own facts may write to the GST practice of their own accord.