Invoicing and GST Taxability for a Solar EPC Business

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Nanu Sharma

14 Points Posted on 17 March 2026

Solar EPC contracts are considered as Composite Supply. But the industry practice as well as GST circular states for 70% of contract value considered goods tax at 5% and 30% considered as service at 18%. Also I want to know the invoicing structure as mostly people give only minimal advance amount but we need to generate invoice on entire value for e way bill. So help me out to know right gst taxation and invoicing to optimize my tax.

Replies (4)

Quick Summary

Solar EPC contracts are composite supplies taxed effectively at ~8.9% (70% goods @5% + 30% services @18%). GST is payable on invoice/advance as per time of supply. E-way bill can be generated using delivery challan for goods movement. Invoicing can be milestone-based as per contract terms.

Aashok Kumar Sharma

Finance/Compliance Consultant

61692 Points Posted on 17 March 2026

Solar EPC contracts have an effective GST rate of 8.9% (70% goods at 5%, 30% services at 18%). Issue a Receipt Voucher for the upfront money and pay GST only on that specific amount. Move your materials to the site using a Delivery Challan, not a Tax Invoice. Generate your E-way bill against the Delivery Challan to stay compliant on the road. Issue Tax Invoices progressively based on contract milestones to protect your working capital.

Nanu Sharma

14 Points Posted on 18 March 2026

Thankyou for the reply. So from your opinion we can issue multiple invoices based on milestone to a single customer. And each invoice should be split in 70:30 ratio right.

Nanu Sharma

14 Points Posted on 18 March 2026

One things also if I do this, the gst liability will occur in the same month. As usually the installation takes 5 days max. It can work when we received any advance at the last week of any month.

Tax Garden

Tax Consultant

516 Points Posted on 29 May 2026

Solar EPC contracts in India are treated as composite supplies under GST. The standard breakdown is 70% of the contract value taxed as goods at 5% and 30% as services at 18%, giving a blended effective rate of around 8.9%. This applies where the contract covers both supply and installation as a works contract. If structured purely as a service, the full 18% applies. Getting the invoice split right matters for your client GSTIN compliance and their ITC claims. This [IMS and GST invoice compliance guide](https://taxgarden.in/blog/ims-invoice-management-system-mandatory-gst-2026) covers the invoice management rules that now apply to all GST-registered businesses.