- GST rates and the 70:30 treatment change and have been litigated — confirm the current position with a chartered accountant before you bill.
- The 70:30 rule treats 70% of a solar system contract as goods and 30% as service.
- The goods part takes a lower solar rate; the service part takes a higher service rate (verify both).
- On a PM-KUSUM pump, the pump, modules and controller are the goods; installation is the service.
- Invoice it as a clean composite / works contract with the split, HSN/SAC and correct place of supply.
If you bill a PM-KUSUM solar pump, the GST PM-KUSUM solar pump 70:30 split decides how much tax you charge and how you write the invoice. This guide explains the mechanism in plain words so your accounts team gets it right — but rates and treatment are litigated, so confirm with a chartered accountant before you bill.
What the 70:30 rule is
The 70:30 rule is a deemed valuation split for a solar power generating system that is supplied as one works or composite contract. Under GST law, 70% of the gross value has been treated as the supply of goods (the system itself, at a lower solar rate), and 30% as the supply of service (installation, at a higher service rate). It is a fixed split set by rule, not a free estimate.
The exact 70:30 split, the goods rate and the service rate are set by GST Council notifications and have been litigated. Verify the current rates and effective dates with a chartered accountant before you rely on any number here. We explain the mechanism honestly, but we do not state any rate as guaranteed-current.
Why the split exists
The split exists because a solar pump job is a composite supply. You are not just selling a pump, and you are not just selling labour. You supply a solar generating system and you install and commission it as one package, for one price. GST has to decide how much of that single price is goods and how much is service, because the two attract different rates.
Rather than make every contractor argue the split each time, the law has used a deemed ratio — the 70:30 treatment — so the goods-versus-service share is fixed by rule. That keeps invoicing consistent. But because it is set by notification, it can move, and courts and Advance Ruling authorities have weighed in. Always check the live position.
The two rates in play
Two different rates blend into the final tax. There is a concessional solar-goods rate on the 70% goods portion (verify current rate), and a standard service rate on the 30% service portion (verify current rate). Neither is fixed by this page.
The 70:30 ratio blends those two into an effective rate on the whole contract. In plain terms: most of the value sits in the lower-rate goods bucket, and a smaller slice sits in the higher-rate service bucket, so the blended rate lands between the two. The exact blended number depends entirely on what the current notification says each rate is — so verify it.
How it applies to a PM-KUSUM solar pump
On a PM-KUSUM solar pump, the 70:30 rule maps cleanly onto the parts of the job. The goods portion is the hardware — the pump set, the solar modules and the controller. The service portion is the work — installation, civil work, wiring, commissioning and the labour to make it run.
So the bulk of a pump contract sits in the goods bucket at the lower solar rate, and the install labour sits in the service bucket at the higher service rate. That is the same pattern as any solar generating system, applied to a single farmer's pump. The numbers behind it still depend on the current notification, so confirm them with a chartered accountant.
How the pump and controller are treated
The pump and the controller (USPC) are treated as part of the goods — the solar power generating system you supply. The pump set, the universal solar pump controller and the modules together make up the equipment that goes into the 70% goods share, while fitting and commissioning them is the 30% service share.
In practice this matters for the HSN codes you put on the invoice for each component, and for whether a part is billed as goods or rolled into the composite supply. Component classification is exactly the kind of detail that AAR rulings turn on, so a chartered accountant should confirm how your specific pump and controller are classified.
Is it 5% or 12%?
Whether the rate is 5% or 12% is exactly what changes through GST Council notifications and AAR rulings — so this page will not pin it down. The goods portion and the service portion carry different rates, and the headline number people quote has moved over time as notifications have been issued and challenged in court.
The honest answer: do not copy a rate from an old invoice or a forum post. Check the current GST notification and confirm with a chartered accountant what rate applies to your goods share and your service share for the date you are billing. The mechanism is stable; the rate is not.
How EPCs should invoice
Invoice a PM-KUSUM pump as a clean composite or works-contract supply that shows the split clearly. A tidy invoice protects you in an audit and keeps the subsidy claim moving. Here is what a good one carries.
- The goods/service split shown on the face of the invoice, in line with the 70:30 treatment (verify).
- Correct HSN for the goods (pump, modules, controller) and correct SAC for the installation service.
- The right place of supply — usually where the pump is installed — so CGST/SGST versus IGST is right.
- E-invoicing if your firm crosses the e-invoice turnover threshold; generate the IRN before issue.
- The applicable rates for each portion, taken from the current notification and confirmed with your CA.
A worked example of the split
The table below shows how the split lands on a sample contract. We use a placeholder value (₹X lakh) on purpose, because the real rates change — read it as a shape, not a quote.
Illustrative worked example only — the 70:30 split and the goods/service GST rates change via GST Council notifications and have been litigated. Verify current rates and the MNRE benchmark treatment with a chartered accountant before invoicing.
Input tax credit (ITC) considerations
Input tax credit on a PM-KUSUM job depends on how your output supply is treated and on the normal GST conditions for claiming credit. Because the supply is composite and part of the value is subsidised, the credit position is not automatic. Blocked-credit rules and the subsidy element can both affect what you may claim.
Keep clean purchase invoices and match your inward GST to your outward supply, so an audit can trace the credit. The exact eligibility on a 70:30 composite supply is a CA question — have a chartered accountant confirm your input tax credit before you close the books for a project.
How GST interacts with the subsidy and the benchmark cost
Whether GST sits inside or on top of the PM-KUSUM benchmark cost depends on the MNRE benchmark and your state tender wording — and it changes between notifications. The tender sometimes states the benchmark as inclusive of taxes, which changes how you price the bid and what you actually net after GST.
This is a real money question for a bid, not a footnote. If you assume GST is extra when the benchmark is inclusive, your margin disappears. Verify the GST treatment against the current MNRE benchmark and your state tender, and have a chartered accountant check the numbers before you submit a price.
Record-keeping for audit
Keep records that let an auditor reconstruct every invoice. The 70:30 split and a subsidised contract draw attention, so a clean paper trail is your best protection. Hold purchase invoices, sales invoices, the contract, the bid sheet, e-invoice IRNs, e-way bills where they apply, and the subsidy-claim documents together per project.
Tie each project's GST output to its inputs so the credit and the tax charged both add up. If a notification changes the rate mid-year, note the effective date against the relevant invoices. Good records turn an audit into a quick check instead of a scramble.
Common GST mistakes EPCs make
Most GST trouble on PM-KUSUM jobs comes from a few repeat mistakes. Avoid these and your books stay clean.
- Copying an old rate from a previous invoice instead of checking the current notification.
- Billing one flat rate with no goods/service split, so the composite treatment is unclear.
- Wrong place of supply — charging CGST/SGST when IGST applies, or the reverse.
- Assuming GST is extra on a benchmark that is actually inclusive of taxes — the margin vanishes.
- Missing e-invoicing after crossing the turnover threshold, which invalidates the invoice.
- Wrong HSN/SAC on components, which an audit or AAR can challenge.
How SuryaHub helps with GST on PM-KUSUM jobs
SuryaHub aims to take the GST headache off your accounts team. The finance and GST module is built to apply the 70:30 split to quotes, raise GST-compliant works-contract invoices with the right HSN and SAC, support e-invoicing, and keep books ready for audit — so the tax side of a PM-KUSUM job is consistent across every project. SuryaHub does not give tax advice; it helps you execute the treatment your chartered accountant confirms. SuryaHub is pre-revenue; real pilots are Suryantra Energy and RGESPL, and some of the above is on the roadmap, not shipped.
Invoice PM-KUSUM jobs cleanly
See how SuryaHub applies the split, HSN/SAC and e-invoicing to your quotes.
Related guides
Frequently asked questions
What is the 70:30 rule for GST on solar?+
The 70:30 rule is a deemed valuation split for a solar power generating system supplied as one composite contract. GST law has treated 70 percent of the gross value as goods at a lower solar rate, and 30 percent as service at a higher service rate. The exact split and both rates are set by GST Council notifications and have been litigated — verify the current position with a chartered accountant.
Is GST on a PM-KUSUM solar pump 5% or 12%?+
GST on a PM-KUSUM solar pump is not one fixed number. The goods portion and the service portion carry different rates, and those rates are exactly what changes through GST Council notifications and AAR rulings. The blended effect depends on the current notification. Confirm the rate that applies to your invoice with a chartered accountant before you bill.
How should an EPC invoice a PM-KUSUM solar pump under the 70:30 rule?+
An EPC should raise a clean composite or works-contract invoice that shows the goods and service split, the correct HSN for the goods and SAC for the service, the right place of supply, and e-invoicing if the firm crosses the threshold. The 70:30 treatment and the rates must be confirmed with a chartered accountant against the current GST notification.
Does GST apply on top of the PM-KUSUM benchmark cost?+
Whether GST sits inside or on top of the PM-KUSUM benchmark cost depends on the MNRE benchmark and the state tender wording, and this changes between notifications. The PM-KUSUM tender sometimes states the benchmark as inclusive of taxes. Verify the GST treatment against the current MNRE benchmark and your state tender before you price a bid.
Can an EPC claim input tax credit on a PM-KUSUM project?+
Input tax credit on a PM-KUSUM project depends on how the output supply is treated and on the usual GST conditions for claiming credit. The 70:30 composite treatment, blocked-credit rules and the subsidy element all affect the position. A chartered accountant should confirm what input tax credit an EPC can claim before the books are closed.
How does SuryaHub help with GST on PM-KUSUM jobs?+
SuryaHub aims to apply the 70:30 split to quotes, raise GST-compliant works-contract invoices with HSN and SAC, support e-invoicing and keep books ready for audit. SuryaHub does not give tax advice and is pre-revenue, with Suryantra Energy and RGESPL as real pilots. Confirm every rate and treatment with a chartered accountant.
Sources & references
GST notifications, the benchmark treatment and the scheme tender come from primary government sources. GST rates and the 70:30 treatment are litigated — always verify the current rate and effective date with a chartered accountant before you invoice.
- CBIC GST portal ↗
GST notifications and circulars on solar power generating systems — verify current rate.
- Ministry of New & Renewable Energy (MNRE) ↗
Benchmark cost and whether GST is inclusive — verify against the latest benchmark.
- PM-KUSUM portal (MNRE) ↗
Scheme tender terms and state SNA conditions — verify current rate and treatment.
Written by the SuryaHub team · reviewed against MNRE & GST notifications · updated 19 June 2026.
Method: GST treatment is litigated and changes via GST Council notifications — confirm the current rate, effective date and any AAR ruling with a chartered accountant. The benchmark treatment should be verified against the MNRE benchmark and the tender. SuryaHub is pre-revenue and does not give tax advice; only Suryantra Energy and RGESPL are real pilots.
Change log: 19 Jun 2026 — first published.