Dear Sir, what will be the rate of GST for solar system. Some people are issuing bills by breaking up the sales value into 70:30 ratio. They are charging 5% GST on 70 % portion (assumed to be material part-solar system) and 18% GST on 30% portion (labour portion) is this correct?

Reply—Yes, this method is correct

The changes in rates on solar panel recommended in 31st meeting of GST council has been inserted by Notification no. 27/2018 dated 31.12.2018 w.e.f. 01.01.2019

GST rate of  5% rate has been prescribed on renewable energy devices & parts for their manufacture (bio gas plant/Solar power based devices, Solar power generating system (SGPS) etc) [falling under chapter 84, 85 or 94 of the Tariff]. Other goods or services used in these plants attract applicable GST.

Certain disputes have arisen regarding GST rates where specified goods attracting 5% GST are supplied along with services of construction etc and other goods for Solar power plant.

To resolve the dispute the Council has recommended that in all such cases, the 70% of the gross value shall be deemed as the value of supply of said goods attracting 5% rate and the remaining portion (30%) of the aggregate value of such EPC contract shall be deemed as the value of supply of taxable service attracting standard GST rate.

Against S.No.234 in column 3 of the Notification No.24/2018-Central Tax (Rate) dated 31.12.2018 following explanation is inserted.

“Explanation: if the goods specified in this entry are supplied, by a supplier, along with supplies of other goods and services, one of which being a taxable service specified in the entry at S.No.38 of the table mentioned in the Notification No.11/2017-Central Tax (Rate), Dated 28.06.2017, the value of supply of goods for the purposes of this entry shall be deemed as seventy per cent of the gross consideration charged for all such supplies, and the remaining thirty per cent of the gross consideration charged shall be deemed as value of the said taxable service.