# Government may soon cut GST on solar EPC contracts, making rooftop and utility plants cheaper

> The GST Council is reportedly considering a big tax cut on renewable energy EPC contracts at its October meeting, a move that could sharply lower the cost of setting up solar plants.

**Type:** article · **Category:** Business · **Published:** 2026-09-07 · **Source:** TrendKia
**Canonical:** https://trendkia.com/en/business/solara-planta-lagane-valon-ko-jalda-mila-sakati-hai-bari-taiksa-rahata-gst-parishada-bana-rahi-yojana-29003 · **Language:** English
**Tags:** Solar Plant, GST Council, Tax Relief, Renewable Energy, EPC Contract, Solar Energy

People planning to install a solar plant at home or for their business may soon have reason to celebrate. The government is preparing to cut taxes linked to renewable energy equipment and services, a move that could make solar installations noticeably cheaper in the coming months.

## What the GST Council may decide in October
According to news reports, the GST Council is considering a major tax relief on Engineering, Procurement and Construction, or EPC, contracts tied to renewable energy at its meeting scheduled for October. The proposal reportedly involves a direct cut of 4 percent in the existing tax rate on such contracts. If the Council approves this, the construction and installation costs involved in setting up a solar plant would see a direct reduction.

## Why this tax cut is being considered necessary
A large chunk of the total cost of a solar plant comes from the EPC contract itself, covering engineering, procurement and construction work, and the tax charged on this component is what makes plants expensive. Since the government's aim is to promote renewable energy, cutting tax on this major cost head is seen as a way to make solar power more attractive to both individuals and companies.

## Several solar schemes are already underway
This move comes at a time when multiple solar initiatives are already running across the country. Reports indicate that the Delhi government has announced free solar plants for households consuming up to 400 units of electricity, while nearly 2,000 homes in Bihar are also set to get solar panels. Under the PM Surya Ghar Yojana, free rooftop solar panels continue to be installed in households, and a new floating solar plant is being built over water in Umaria, Madhya Pradesh. The possible GST cut is being seen as the next step in this broader renewable energy push.

## How ordinary people and businesses stand to gain
If this tax cut is implemented, the cost of installing a solar plant at a home, shop, factory or any institution would come down. This would lower the upfront investment needed, encourage more people to switch to solar power sooner, and lead to long-term savings on electricity bills.

## What this means for you
If this tax cut goes through, the upfront cost of installing a solar plant would come down directly.

- **Across India:** Anyone planning to set up a solar plant at home, in a shop or at a factory could see lower installation costs, making the shift to solar more affordable nationwide.
- **Effect on electricity bills:** Cheaper solar installation means ordinary consumers stand to save more on electricity bills over the long run.
- **Benefit for companies:** Firms that build solar plants or handle EPC work would see lower overall project costs, potentially drawing in more customers.
- **Boost to existing schemes:** Paired with schemes like the PM Surya Ghar Yojana that already offer free rooftop panels, this tax cut could speed up the government's broader solar adoption targets.
- **Decision still pending:** This is currently only a proposal, with a final call expected at the GST Council's October meeting, so anyone planning an installation should wait for the official announcement.

## Questions & Answers

### 1. Which tax is being considered for a cut?
The GST charged on Engineering, Procurement and Construction (EPC) contracts linked to renewable energy is being considered for a cut.

### 2. How much could the tax be reduced by?
Reports suggest a direct cut of around 4 percent in the existing tax rate.

### 3. When will this decision be made?
The GST Council is expected to consider this proposal at its meeting scheduled for October.

### 4. Who benefits if this tax cut is approved?
Households, shops, factories and other institutions installing solar plants, as well as companies handling EPC work, would benefit from lower installation costs.

### 5. Is this decision final yet?
No, this is currently only a proposal, and the final decision will be taken at the GST Council's October meeting.

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