🌞 Introduction
With India pushing aggressively toward renewable energy, businesses are rapidly adopting solar power to reduce operational costs and build sustainable operations. What many companies don’t realize is that solar energy doesn’t just save electricity—it also brings substantial tax benefits and accelerated depreciation advantages under Indian tax laws.
In this blog, we break down how businesses can legally save lakhs every year using solar tax exemptions, accelerated depreciation, GST input credit, and more.
⚡ 1. Income Tax Benefits on Solar Installation
Businesses that install solar power systems can enjoy multiple tax relaxations under the Income Tax Act.
✔ Section 32 – Depreciation on Solar Equipment
Solar equipment qualifies as a “renewable energy device” under the depreciation schedule.
Earlier, the government offered 80% accelerated depreciation, which was later reduced but still remains attractive.
📌 Current Depreciation Rate (AY 2024–25): 40%
Businesses can claim 40% depreciation on the value of a solar power plant every year.
This significantly reduces taxable income, increasing savings.
💰 2. How Depreciation Helps Businesses Save Money
Let’s understand the real benefit with an example:
Solar Project Cost: ₹10,00,000
Depreciation Allowed: 40%
Depreciation Amount: ₹4,00,000
Tax Saved at 25% Corporate Tax:
→ ₹1,00,000 saved in the first year alone
This makes solar one of the fastest payback investments for companies.
🏭 3. GST Input Tax Credit on Solar
Solar equipment such as:
Solar panels
Inverters
Mounting structures
Batteries
Cables
Solar accessories
are taxed at 13.8% GST (5% on components + 18% on services).
Businesses can claim 100% GST Input Tax Credit, which significantly reduces capital expenditure.
🧾 4. Expenses Allowed as Business Deduction
Businesses can also deduct the following as operational expenses:
Solar AMC (Annual Maintenance Contract)
Repairs & maintenance
Solar cleaning charges
Insurance of solar assets
These deductions reduce the overall tax burden and improve ROI.
🌍 5. Carbon Credits & Renewable Energy Certificates (RECs)
Companies installing solar can earn:
Carbon Credits (for reducing emissions)
RECs (Renewable Energy Certificates)
These can be traded on energy exchanges, generating additional income apart from energy savings.
🏦 6. Solar Loans & Interest Deductions
If a business takes a loan to install solar, the interest paid on the loan is allowed as a business expense, reducing taxable profits.
Some banks also offer priority lending for renewable energy under RBI guidelines.
🔋 7. Why Solar Is a Smart Financial Move for Businesses
Here’s why Indian businesses are choosing solar:
✔ Save 70–90% on electricity bills
✔ Claim 40% depreciation to reduce taxes
✔ Recover cost in 3–4 years
✔ VAT/GST input credit
✔ Hedge against rising power tariffs
✔ Increase asset value
✔ Improve ESG score and sustainability ranking
Solar is one of the few investments that:
🔹 Saves money
🔹 Reduces tax
🔹 Earns revenue
🔹 Enhances brand value
🧑💼 8. How Solar of India Helps Businesses
Solar of India provides end-to-end services, including:
Commercial rooftop solar installation
Tax & depreciation advisory
Subsidy eligibility guidance
Net metering approvals
Engineering, procurement & construction (EPC)
25-year performance support
Our goal is to ensure every business gets maximum financial benefits from solar adoption.
🏁 Conclusion
For Indian businesses, installing solar is not just an environmental decision—it’s a highly profitable financial strategy. With tax advantages like Section 32 depreciation, GST input credit, operational deductions, and long-term savings on electricity, solar delivers unmatched ROI.
Switching to solar is no longer optional—it’s the smartest business move for 2024 and beyond.