Commercial Solar Subsidy in India: What's Real in 2026

Direct answer

There is no central government capital subsidy for commercial or industrial rooftop solar in India. PM Surya Ghar Muft Bijli Yojana - the ₹78,000/kW-cap CFA scheme you see advertised - is strictly for residential households, and RESCO/PPA-owned systems are excluded even there. What C&I buyers get instead is the tax code: 40% Year-1 accelerated depreciation, 5% GST on solar devices (down from 12% since 22 September 2025) with full input credit, and a short list of state-level incentives.

Why PM Surya Ghar doesn't apply to your factory

PM Surya Ghar's central financial assistance - ₹30,000/kW for the first 2 kW plus ₹18,000 for the 3rd kW, capped at ₹78,000 - flows only to individual households with LT domestic connections installing 1-10 kW. Shops, offices, factories and every other commercial or industrial consumer are explicitly excluded, and third-party/RESCO-owned systems don't qualify even for homes (source: quickestimate.co scheme FAQ compilation, Jul 2026). MNRE's rooftop Phase-II CFA that does exist for institutions (20-40% of benchmark cost via SNA/SECI channels) covers government buildings, schools and hospitals - not private C&I (source: quickestimate.co scheme comparison, Jun 2026). Any vendor quoting you a "commercial solar subsidy" is describing a scheme that doesn't exist.

The benefits that actually exist

1. Accelerated depreciation: the single biggest lever

Solar plant machinery qualifies for 40% depreciation in Year 1 on Written Down Value under Section 32, in both the old regime (effective ~31.2% tax saving at the marginal rate) and the 115BAA regime (effective ~25.17%) - see our accelerated depreciation vs 115BAA guide for the arithmetic. Two timing rules matter: commission before 30 September to claim the full 40% that financial year (half-year rule halves it otherwise), and note that only CAPEX/owned plants qualify - a RESCO customer claims nothing, the developer does. On a ₹50 lakh system at a 30% tax bracket, Year-1 AD saves roughly ₹6 lakh in tax.

2. The 2025 GST cut

The 56th GST Council (3 September 2025) cut the rate on renewable energy devices - including solar power generators and PV cells/modules - from 12% to 5%, effective 22 September 2025 (GST Council press release, Sep 2025). This directly lowers module cost for C&I buyers. The planning lever left in place: bundled EPC contracts can straddle works-contract treatment with components (structures, some BOS, services) at 12-18%, so insist on a properly bifurcated invoice - and claim the input tax credit either way.

3. State-level incentives (a short list)

• Delhi: the Solar Policy 2023 gives C&I a ₹1/kWh generation-based incentive for 5 years for the first 200 MW deployed - a generation-linked, not capital, subsidy (policy tracker, Jun 2025; 2025 amendment note, Jul 2025).
• Uttar Pradesh: five-year electricity-duty exemption on captive solar and a 75% cross-subsidy-surcharge waiver for solar open access.
• Haryana: electricity-duty exemption and industrial-policy incentive points for solar investment.
• Most other state top-ups you'll see advertised (₹10,000-30,000/kW in Gujarat, Karnataka, Rajasthan) are residential-only.

Stack these against the grid-side savings modelled in our solar savings calculator guide for factories and panel ROI and payback guide.

What this means for your business case

Without subsidy, the C&I case rests entirely on self-consumption economics: a ₹36-42/Wp turnkey plant generating at ₹2.5-3/kWh LCOE against HT tariffs of ₹7.9-11/kWh. Accelerated depreciation and GST input credit pull industrial paybacks from 6-7 years to 3.2-4.8 years - which is why commissioning timing (before 30 September) and invoice structure (bifurcated GST) are the two highest-value decisions in your project, worth more than any mythical subsidy.

Budget context for module-level pricing is in our 2026 module price tracker and per-watt cost guide.

Frequently Asked Questions

Is there any government subsidy for commercial solar in India?

No. There is no central capital subsidy for commercial or industrial rooftop solar under any current scheme. PM Surya Ghar CFA is residential-only, and MNRE institutional CFA covers government buildings, schools and hospitals - not private businesses. C&I economics come from accelerated depreciation, GST input credit and avoided grid tariffs.

Can a shop or factory apply for PM Surya Ghar subsidy?

No. PM Surya Ghar requires an LT domestic (residential) connection; shops, offices and factories are explicitly excluded, and RESCO/PPA-owned systems don't qualify even for households. A commercial connection that installs solar gets zero CFA under this scheme.

What is the GST rate on solar in 2026?

5% on renewable energy devices including solar power generators and PV modules - cut from 12% by the 56th GST Council effective 22 September 2025. EPC contract components such as mounting structures and certain services can still attract 12-18%, so bifurcation of the invoice matters, and input tax credit is claimable on the GST paid.

How much does accelerated depreciation save on a solar plant?

40% of the plant's Written Down Value is claimable in Year 1 under Section 32. At a 30% marginal tax rate that's roughly a 12% reduction in effective first-year cost; combined with GST input credit, Year-1 cash benefits typically cut effective cost 25-35% - the reason industrial paybacks run 3.2-4.8 years instead of 6-7.

Which states give incentives for commercial rooftop solar?

The most concrete: Delhi pays a ₹1/kWh generation-based incentive for 5 years to C&I within its first 200 MW; UP offers a 5-year electricity-duty exemption and 75% CSS waiver for solar open access; Haryana exempts electricity duty. Most advertised state top-ups (Gujarat, Karnataka, Rajasthan) are residential-only schemes.