Solar Tax Benefit & Other Economical Solutions for Businesses

Indian government encourages the adoption of renewable solar energy by providing tax benefits and other financial savings for solar system installation. Tax exemptions and incentives have improved investment in renewable energy, job creation, and overall economic growth of the nation.

The launch of solar subsidy schemes, tax benefits, and other incentives reduce the stress of the huge upfront installation cost of solar systems. These financial benefits are provided to homeowners and commercial solar users.

In this post, you’ll walk through different tax benefits and economic advantages businesses can avail of by adopting solar power.  

Cost Savings through Solar Power Adoption

Solar power systems help in eliminating or reducing the electricity bill of an office building by half or more proportion. The cost per unit of existing electricity costs tends to be much higher than what is invested for renewable solar energy. This helps in further financial savings for businesses. The money savings have a huge positive impact on small and big businesses.

The reduction in solar system costs ensures the use of solar power as a safe and sound investment. Alongside long-term cost savings, it also generates quick payback. Many business owners have stated that they get ROI within 3 to 4 years of solar system installation. They also said that reducing the electricity cost also helps them with reduced operating costs of their organization.

Accelerated Depreciation

Accelerated depreciation or AD allows businesses to get higher solar tax depreciation rates. It can be availed for assets used in solar projects. The government of India enables companies to receive 80% depreciation on modern solar energy plants in the first year. This helps businesses in cost saving through solar power with a higher ROI (return on investment) in the first year and making solar power plant projects financially feasible with reduced costs.

For example, a company invested in a solar power plant of worth INR 1 crore. It can receive an 80% depreciation of INR 80 lakh in the first year. This helps a company decreases its taxable income and enjoy huge tax savings.

This tax exemption on solar energy allows more businesses and commercial facilities to install solar power plants and expand the adoption of renewable energy in India.    

Tax Benefits

Different types of direct and indirect tax benefits are provided for solar panel installations. It includes custom duty exceptions, sales tax safeguards, excise duty exemptions, and anti-dumping duty inclusions. Up to 40% accelerated depreciation is offered in the first starting year of installation as the tax benefit for businesses or commercial users. They can recover 40% of costs in the first year to have great cost savings.

Net Metering Incentives & Banking Charges

Net metering is a policy or a mechanism in which a consumer sends the excess solar produced energy to the grid. With this strategy, the power produced by rooftop solar panels is used for self-consumption. This arrangement ensures the dual electrical flow. An individual gets the electricity bill of DISCOMs.

Initially, the C&I sector protested and predicted critical prospects, resulting in the Banking Charges clause. In this clause, a consumer is compensated for net power units stored in the power grid infrastructure for final usage.

After that, the net metering policy is widely adopted and helps in providing financial support to residential, commercial, and industrial sectors. Both commercial and residential consumers can export excess solar power back to the grid and reduce their future utility bills. The launch of banking charges assists in providing more sustainable solutions to the ecosystem. Consult with your rooftop solar installation company to know if you have a net metering policy.

RECs (Renewable Energy Certificates)

These are tradable certificates given as a reward to those consumers who produce renewable energy by providing cash incentives for each unit generated. The Central Electricity Regulatory Commission issued REC to promote solar rooftop panel installation and benefit the C&I field to get carbon neutrality.

Assured PPA (Power Purchase Agreement)

Agreements signed by the DISCOM, investors, and regulatory agencies are considered as PPAs. The electricity generated by solar rooftop panels is completely charged or transferred into the power grid at regulated Fit (feed-in tariffs).

The utilities of the state assure the solar energy purchase through a PPA consisting of a negative load and is utilized regularly. It allows investors to make the best use of their underused property by designing solar power plants and encouraging solar power production. Property owners and landlords receive incentives for the installation of solar power grids for clean and green electricity production.

Capital Subsidies for Homeowners

This is another initiative by the Indian government taken primarily for homeowners in rural and urban areas. The government launched different plans like Sristi and Saubhagya in 2022 to boost the installation of residential rooftop solar panels in rural and urban areas. Under the Saubhagya plan, solar rooftops are installed in rural homes to provide free electricity to all homes, irrespective of their BPL or APL status.   

How to Get Solar Power Tax Benefits?

To avail of solar tax benefits, you can consult a reliable charted account (CA). They will assist you with the complete guide after reviewing your Tax Audit Report. In addition, they will guide you on how much amount you will receive, in how much time, and in what ways.


At the bottom line, tax benefits for businesses and homeowners can positively impact the use of sustainable solar energy. The government of India is constantly providing different incentives and subsidies to encourage more consumers to switch to a renewable source of energy.

If you are not aware of which types of solar panels you must install and where you should get their installation, then count on Megamax Solar. This is a well-known solar power company offering installation services for different sorts of solar power systems. This dynamic company provides world-class installation services and guidance on which system to choose, how to receive tax benefits or subsidies, and more things. So, contact us with your customized requirements and get the most useful quote with a free consultation.

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