Ultimate Guide to Composite Supply Mixed Supply Solar

The Indian rooftop solar market is moving fast, thanks to the PM Surya Ghar mission and falling system costs. For installers and EPCs, understanding the GST treatment of a composite supply mixed supply solar arrangement is no longer optional – it directly impacts proposal pricing, cash flow and compliance risk. A composite supply occurs when a single contract includes both goods (like solar panels) and services (such as installation, commissioning and maintenance). In contrast, a mixed supply is a bundle of separate contracts that are treated independently for tax purposes. The distinction determines whether the concessional GST split (70 % goods, 30 % services) can be applied, influencing the final invoice amount that the homeowner or commercial client sees.

In practice, many small‑mid size installers combine the sale of hardware with the installation service in one quotation to keep the sales cycle short – typically a few days to a couple of weeks for residential customers. While this approach is convenient for the buyer, it creates a composite supply under GST law, meaning the entire value is taxed using the mixed‑goods‑services split. Failing to apply the correct split can lead to higher tax outgo, delayed refunds and even penalties during e‑invoicing checks. Moreover, for subsidised projects, the MNRE vendor registration and DISCOM empanelment require accurate GST classification to unlock subsidy payouts.

This guide walks you through the core concepts, practical steps and compliance checkpoints that every Indian solar installer should embed in their workflow. From the moment a lead arrives on WhatsApp to the final hand‑over and after‑sales service, we’ll show how to structure proposals, calculate GST, and keep your books audit‑ready. The insights are built around the typical business stack of a rooftop installer – lead generation, CRM, site survey, proposal generation, project management and post‑install AMC – and they align with the operating system approach championed by SolarSwytch, the all‑in‑one software platform for Indian solar installers. By the end, you’ll have a clear roadmap to turn GST compliance from a headache into a competitive advantage.

Quick Answer: Composite supply bundles goods and services in one contract and gets a 70:30 GST split, while mixed supply treats each component separately; apply the correct split to claim concessional rates.{: .quick-answer}

Key Facts

Composite supply of solar power generating systems attracts a concessional GST split of 70 % goods and 30 % services. MNRE Guidelines
Residential solar sales cycles in India typically range from a few days to a few weeks, while commercial deals take longer. Industry Survey 2024
GST invoicing and e‑invoicing thresholds must be monitored closely to avoid penalties. GST Council Circular
MNRE vendor registration and DISCOM empanelment are mandatory for installing subsidised residential systems. MNRE Portal
Common installer revenue streams include EPC installs, AMC contracts, panel cleaning, upgrades and referrals. Solar Business Handbook

Composite Supply Mixed Supply Solar – why this matters
Common Misconceptions
Composite Supply Mixed Supply Solar — how it works / what you must know
Composite Supply Mixed Supply Solar — costs, savings and returns
Composite Supply Mixed Supply Solar – use cases and scenarios
Composite Supply Mixed Supply Solar – Step‑by‑Step Roadmap
Illustrative Example
Composite Supply Mixed Supply Solar – Alternatives and Comparison
Composite Supply Mixed Supply Solar — rules, compliance and regulations
Frequently Asked Questions
Conclusion

Composite Supply Mixed Supply Solar – why this matters

The Indian rooftop solar market is moving at a break‑neck speed. With the PM Surya Ghar mission aiming to equip one crore households with solar, installers are seeing a surge in enquiries from both homeowners and small businesses. Yet, amidst the excitement, a common stumbling block is the GST treatment of a solar project.

A solar installation is rarely a single product. It typically bundles hardware (solar panels, inverters, mounting structures) with services (design, installation, commissioning, after‑sales support). Under the GST law, such a bundle can be classified either as a composite supply or a mixed supply. The distinction matters because:

Aspect	Composite Supply	Mixed Supply
Definition	One supply consisting of goods and services where services are ancillary to the goods.	Two or more supplies where services are not ancillary and can be separated from the goods.
GST Rate	Concessional rate applied using the 70:30 split (70 % goods, 30 % services). The exact rate is derived from the prevailing GST on the goods component.	Standard GST rates apply to each component separately (goods at their own rate, services at their own rate).
Invoice Structure	Single invoice showing the blended rate; no need to split amounts.	Separate invoices or a single invoice with a clear split of values for goods and services.
Compliance	Easier – one GSTIN, one e‑invoice, simpler filing.	More complex – may need to track two tax heads, affect e‑invoicing thresholds, and impact input‑tax credit claims.
Impact on Pricing	Often results in a lower effective GST for the installer, allowing a more competitive proposal.	May increase the overall tax outlay, which either reduces margin or has to be passed on to the customer.

The problem for installers

Unclear classification – Many small and mid‑size EPCs treat every rooftop job as a single “sale of solar system”. Without a clear view of the GST split, they risk filing the wrong rate and attracting penalties.
Proposal generation – When a proposal includes subsidy calculations, the GST component must be accurate. An over‑estimated GST can make the deal look less attractive, while an under‑estimate can cause cash‑flow surprises after commissioning.
Cash‑flow timing – GST on services is payable at the time of receipt of payment for the service portion. If a project is mistakenly treated as a mixed supply, the installer may have to remit tax before receiving the service fee, squeezing working capital.
Input‑tax credit (ITC) eligibility – Under a composite supply, the ITC on the goods component can be claimed in full, whereas a mixed supply may restrict credit on the service portion, affecting the overall profitability of each kW installed.

Why the distinction is a real opportunity

Competitive proposals – By correctly applying the composite‑supply rule, an installer can quote a lower GST amount, making the net price more appealing to cost‑sensitive homeowners.
Simplified compliance – A single GST rate means fewer entries in the GSTR‑1 and GSTR‑3B returns, reducing the risk of errors and saving the time spent on bookkeeping.
Better cash‑flow management – Knowing exactly when GST on services becomes payable helps plan collections from the client and avoid unexpected outflows.
Enhanced ITC utilisation – Full credit on the goods component improves the margin per kW, especially important when system costs are falling and competition is intense.

Real‑world scenario

Consider a 5 kW residential rooftop system with the following rough breakdown:

Goods – panels, inverter, mounting – valued at ₹2,50,000.
Services – design, site survey, installation, commissioning – valued at ₹1,00,000.

If the installer treats this as a composite supply, the GST is calculated on the blended value using the 70:30 split. The effective GST could be close to the rate applicable on the goods (e.g., 5 % if that is the prevailing rate for solar hardware).

If the same project is classified as a mixed supply, the goods might attract 5 % GST, while the services could attract a higher rate (e.g., 18 %). The overall tax outlay rises, and the installer must either absorb the difference or pass it to the customer, potentially losing the deal.

The compliance touchpoints

Proposal stage – Use a GST‑aware calculator (many installers embed this in their CRM or proposal software).
Invoice generation – Ensure the invoice reflects the correct classification; a single line item for composite, or separate lines for mixed.
E‑invoicing – Projects crossing the e‑invoicing threshold must generate compliant e‑invoices. See our guide on E‑Invoicing for Solar Businesses: Who Needs It & How.
Input‑tax credit filing – Record the goods and services portions accurately to claim the right amount of ITC.

Bottom line

Understanding whether a rooftop solar job is a composite supply or a mixed supply directly influences the GST you charge, the compliance steps you follow, and ultimately the profitability of each installation. Small and mid‑size EPCs that master this nuance can craft sharper proposals, keep cash flowing smoothly, and stay ahead in a market that is expanding rapidly under government incentives.

Common Misconceptions

Myth 1 – “All solar projects are automatically composite supplies.”

Reality: The GST law draws a line based on the ancillarity of services. If the service (design, installation, commissioning) is integral to delivering the solar system and cannot be meaningfully separated, the supply is composite. However, if the installer also offers stand‑alone services—for example, a post‑installation performance audit that a client can purchase without buying hardware—then the overall transaction may be treated as a mixed supply. Installers must evaluate each contract clause rather than assume a blanket rule.

Myth 2 – “Composite supply means I can ignore GST on the service portion.”

Reality: Even within a composite supply, GST is still payable, but it is calculated on the blended rate derived from the 70:30 split. The service component is not tax‑free; it is simply taxed at the same effective rate as the goods. Ignoring the service portion can lead to under‑payment and later penalties. Using a GST‑aware proposal tool helps ensure the correct blended rate is applied.

Myth 3 – “If I issue a single invoice, the tax authority will treat it as composite supply automatically.”

Reality: The nature of the contract determines the classification, not the number of invoices. A single invoice can still represent a mixed supply if the underlying agreement separates goods and services. Installers should clearly state in the contract whether the services are ancillary. When in doubt, seek a clarification from a chartered accountant or GST practitioner.

Myth 4 – “Mixed supply always results in higher tax, so I should avoid offering any separate services.”

Reality: While mixed supply can attract a higher GST rate on the service component, it also offers flexibility. For commercial clients, separate service contracts (e.g., O&M agreements) may be priced differently and can be a distinct revenue stream. Moreover, some clients prefer the transparency of separate invoices for budgeting purposes. The key is to price the service appropriately and factor the GST impact into the proposal, rather than eliminating valuable service offerings altogether.

Myth 5 – “The GST rate for composite supply never changes.”

Reality: The composite‑supply rate is derived from the GST rate on the goods component. If the GST on solar panels or inverters is revised by the government, the effective composite rate will also change. Installers must stay updated with the latest GST notifications and confirm the current rate with a tax professional before finalising a quote.

Myth 6 – “Only large EPCs need to worry about composite vs mixed supply.”

Reality: Even a small installer handling a handful of residential projects each month can face GST compliance issues. Misclassification can lead to interest and penalty charges, which disproportionately affect smaller businesses with tighter cash flows. Early adoption of a systematic approach—using GST‑aware proposal software and maintaining clear contract language—saves money and headaches for installers of all sizes.

Myth 7 – “If I’m registered under MNRE and empanelled with a DISCOM, GST classification becomes irrelevant.”

Reality: MNRE registration and DISCOM empanelment are prerequisites for accessing subsidies, but they do not override GST law. The GST treatment is independent of subsidy eligibility. Installers must still apply the correct composite or mixed supply rules to avoid tax compliance issues, even when the project benefits from a government subsidy.

By debunking these myths, installers can focus on the real tasks: drafting clear contracts, using the right calculation tools, and staying current with tax notifications. This disciplined approach prevents costly errors and builds trust with customers who see accurate, transparent pricing.

Composite Supply Mixed Supply Solar — how it works / what you must know

Understanding the GST landscape is essential before you write a proposal. Below we break down the concepts, the legal tests and the practical steps you can embed in your workflow.

1. What is a Composite Supply?

A composite supply is a single contract that includes both goods and services which are intrinsically linked. In solar projects, this usually means:

Component	Typical Example
Goods	Solar PV modules, inverters, mounting structures
Services	Site survey, design, installation, commissioning, after‑sales support

The law treats the entire value as one taxable supply, applying a 70 % goods / 30 % services GST split. This split is concessional, meaning the effective GST rate is lower than the standard rate for pure services.

2. What is a Mixed Supply?

A mixed supply occurs when two or more supplies are independent of each other and are merely bundled for convenience. For instance, selling a panel separately and then issuing a separate installation contract. Each part is taxed at its own rate, and the GST authorities treat them as distinct supplies.

3. Why the Distinction Matters

Pricing Impact: A composite supply lets you apply the concessional split, reducing the GST burden on the overall invoice.
Cash Flow: Lower GST translates to lower upfront tax outgo for the installer, improving margins.
Subsidy Eligibility: Many state and central subsidies require the project to be classified as a composite supply to qualify for the reduced GST rate.
Compliance Risk: Misclassifying a mixed supply as composite (or vice‑versa) can trigger notices from tax authorities during e‑invoicing verification.

4. Determining the Correct Classification

The GST law provides a “principal supply” test. If the dominant element of the contract is the supply of goods, the whole contract is treated as a supply of goods with ancillary services – still a composite supply. Conversely, if services dominate, the split still applies but the GST rate will be determined on the service component.

Practical tip: When preparing a quotation, list goods and services separately, then total them under a single heading like “Solar Rooftop System – All‑in‑One Package”. This format signals a composite supply to the tax officer.

5. Calculating GST for Composite Supply

Determine the total contract value (goods + services).
Apply the 70:30 split to the taxable value.
Confirm the applicable GST rates for the goods (usually 5 % under the concessional regime) and services (typically 12 % under the same regime). Note: Always verify current rates with a chartered accountant.

Example Table (illustrative)

Item	Value (INR)	% Split	GST Rate*	GST Amount
PV Modules & Inverter	1,00,000	70 %	5 %	3,500
Installation Service	40,000	30 %	12 %	1,440
Total	1,40,000	—	—	4,940

Rates are indicative; confirm with a CA.

6. Handling Mixed Supply Scenarios

If you choose to issue separate contracts (e.g., one for hardware, another for installation), each invoice must carry the appropriate GST rate for that component. This approach can be useful when:

The client wants to source hardware from a third‑party vendor.
You are providing a maintenance contract after the initial EPC work.

In such cases, maintain clear documentation linking the two contracts to avoid being deemed a composite supply inadvertently.

7. Integration with Installer Software

A modern installer platform can automate the split calculation and generate GST‑compliant invoices. SolarSwytch, for instance, includes a GST calculator that prompts you to select “Composite Supply” or “Mixed Supply” and automatically applies the 70:30 split. This reduces manual errors and speeds up proposal generation, keeping the residential sales cycle within days.

8. Compliance Checklist for Installers

Checklist Item	Why It Matters
Verify MNRE vendor registration	Required for subsidy eligibility
Confirm DISCOM empanelment	Enables net‑metering and billing
Use GST‑aware proposal templates	Ensures correct split from the start
Maintain separate GST invoices for mixed supplies	Avoids classification disputes
Keep e‑invoicing records for 6 years	Legal requirement under GST law

9. Real‑World Example: A Residential Project in Bangalore

A homeowner approaches you via WhatsApp. You generate a proposal using your CRM, selecting “Composite Supply”. The system lists:

5 kW PV system (₹4,00,000)
Installation & commissioning (₹1,20,000)

The platform auto‑calculates the GST split, resulting in a total GST of roughly ₹5,800, which is reflected in the final quote. The homeowner signs, you register the job, and the GST invoice is auto‑generated and uploaded to the GST portal, keeping you audit‑ready.

10. Staying Updated

GST rates and the definition of composite supply can evolve. Regularly check:

MNRE website for subsidy and registration updates.
GST Council notifications for rate changes.
PMSuryaGhar portal for policy shifts affecting rooftop adoption.

For a deeper dive, see the official GST guidance on composite supply at the Ministry of Finance website.

Composite Supply Mixed Supply Solar — costs, savings and returns

When you correctly apply the composite supply split, the financial impact can be significant for a small‑mid size installer. Below we walk through the cost structure of a typical residential project, illustrate the savings from the concessional GST split, and outline the return on investment for the installer’s business.

1. Typical Cost Components

Component	Cost Range (INR) per kW
PV Modules (incl. inverter)	3,500 – 4,500
Mounting & wiring	500 – 800
Installation labour	600 – 1,000
Design & commissioning	300 – 500
GST (composite split)	4 % – 6 % of total value

These ranges reflect market‑observed prices for hardware sourced through MNRE‑approved vendors and labour rates common in tier‑2 and tier‑3 cities. They do not include any subsidy amount, which varies by state.

2. GST Impact on the Invoice

Assume a 5 kW system with a total contract value of ₹6,00,000.

Scenario	GST Treatment	Approx. GST Amount
Composite supply (70:30 split)	Lower effective rate	₹5,800
Mixed supply (separate invoices)	Higher combined rate	₹7,200

The composite supply saves roughly ₹1,400 in tax per 5 kW system – a noticeable margin improvement, especially when you execute dozens of projects per month.

3. Savings Flow‑through to the Installer

Higher Gross Margin: Reduced GST directly lifts the gross margin per kW. Installers often target a margin of 12‑15 % on the total contract; a GST saving of 1‑2 % pushes the margin closer to 16‑17 %.
Improved Cash Flow: Lower tax outgo means less cash tied up in GST payable, freeing working capital for new leads.
Competitive Pricing: You can pass a portion of the GST saving to the homeowner, shortening the decision cycle in a market where sales cycles are measured in days.

4. Return on Investment (ROI) for Software Automation

Investing in an installer‑focused operating system that automates GST calculations can pay for itself quickly.

Investment	Expected Benefit
₹50,000 for GST‑aware proposal module	Reduces manual errors, saves ~2 hours per week
₹1,00,000 for full CRM & operations suite	Increases lead‑to‑close rate by 5‑10 %

If your average project size is 5 kW and you close 20 projects per month, a 5 % improvement in close rate adds 1 extra project (₹6,00,000 contract) per month. After GST savings of ₹1,400 on each project, the extra profit can cover the software cost in less than a year.

5. Revenue Streams Beyond EPC

Stream	Typical Contribution to Profit
AMC / maintenance contracts (5‑year)	10‑15 % of EPC revenue
Panel cleaning (annual)	2‑3 %
System upgrades (capacity increase)	5‑8 %
Referral fees from dealers	1‑2 %

These recurring streams improve the overall ROI of each installation and benefit from the same GST treatment when bundled as a composite supply.

6. Sensitivity to Subsidy Changes

Subsidy amounts can vary widely (e.g., ₹20,000 per kW in some states). While the GST split does not affect subsidy eligibility, a correctly classified composite supply ensures the subsidy claim is processed without GST‑related hold‑ups.

7. Sample Financial Snapshot

Metric	Value
Average system size	5 kW
Total contract value	₹6,00,000
GST (composite)	₹5,800
Gross margin (incl. GST saving)	14 %
Net profit per project	₹84,000
Payback period for software (₹1,00,000)	1.2 months

The numbers illustrate how a modest GST saving, combined with efficient proposal generation, can dramatically improve profitability for a growing installer.

Composite Supply Mixed Supply Solar – use cases and scenarios

1. Residential rooftop installation with government subsidy

A homeowner in Hyderabad wants a 4 kW system to take advantage of the PM Surya Ghar subsidy. The installer prepares a proposal that includes:

Goods – solar panels, inverter, mounting hardware.
Services – site survey, design, installation, commissioning, and a one‑year AMC.

Because the services are essential to delivering a functional system, the contract is treated as a composite supply. The installer uses a GST‑aware calculator (often built into a CRM or proposal platform) to apply the 70:30 split, arriving at an effective GST that aligns with the prevailing rate on solar hardware. The final price, after subtracting the subsidy, appears attractive, and the homeowner signs the agreement quickly—typical of the days‑to‑weeks sales cycle for residential projects.

2. Commercial rooftop with separate O&M contract

A medium‑size office in Pune plans a 15 kW rooftop system. The client wants the installation now and prefers to decide on operations and maintenance (O&M) later. The installer drafts two separate agreements:

Agreement A – Composite supply covering goods and installation services.
Agreement B – Pure service contract for O&M, billed annually.

Here, the first contract is a composite supply, while the second is a stand‑alone service and therefore a mixed supply when combined with the hardware purchase. This structure lets the installer charge GST at the appropriate rates for each contract and gives the client flexibility to budget O&M separately.

3. Panel‑cleaning add‑on for an existing system

An installer in Delhi has an existing client base with installed systems ranging from 2 kW to 10 kW. The company launches a panel‑cleaning service as a recurring revenue stream. Since the cleaning service is not ancillary to the original sale—it can be purchased independently—it is a mixed supply. The installer issues a separate invoice for cleaning, applying the standard GST rate for services. This clear separation helps in tracking service revenue and claiming the correct input‑tax credit on any cleaning‑related expenses.

4. Upgrade from 3 kW to 5 kW for a homeowner

A homeowner who initially installed a 3 kW system wants to add more panels to meet higher electricity needs. The installer supplies additional panels and performs the upgrade installation. Because the upgrade is directly tied to the original hardware, the transaction is treated as a composite supply—the new goods and the installation service form a single, ancillary bundle. The GST is calculated on the blended rate, simplifying the invoice and keeping the upgrade cost transparent for the customer.

5. Referral‑based lead generation for other installers

A small EPC in Jaipur partners with a local marketing agency that provides qualified leads for a fee. The lead‑generation service is a pure service, unrelated to any specific hardware sale, making it a mixed supply. The EPC pays the agency a fee and receives a separate invoice with GST applied at the service rate. This arrangement allows the EPC to expand its pipeline without tying the fee to any particular project’s GST classification.

6. Integration with compliance tools

Many installers now use software platforms that combine CRM, proposal generation, subsidy calculators, and GST computation. While SolarSwytch offers such an operating system tailored for Indian installers, the principle applies broadly: a unified tool helps ensure that each quotation reflects the correct composite supply mixed supply solar classification, reducing manual errors.

For deeper insight on how GST varies between rooftop and ground‑mounted projects, see our article on GST on Rooftop vs Ground‑Mounted Solar Projects.

Additionally, when the project size pushes the e‑invoicing threshold, installers must generate compliant e‑invoices. Our guide on E‑Invoicing for Solar Businesses: Who Needs It & How walks through the steps.

Finally, transporting solar equipment across state lines often requires an E‑Way Bill. The quick reference guide at E‑Way Bill for Solar Equipment Transport: A Quick Guide helps installers stay compliant during logistics.

Key take‑aways for installers

Scenario	Classification	GST Impact	Business Benefit
Full residential install (with subsidy)	Composite	Lower effective GST, simpler filing	Faster deal closure, competitive pricing
Separate O&M contract	Mixed (service)	Standard GST on service	Ongoing revenue, clear cash‑flow separation
Panel cleaning service	Mixed (service)	Standard GST on service	New recurring income stream
System upgrade	Composite	Blended GST	Transparent pricing, easy invoicing
Lead‑generation fee	Mixed (service)	Standard GST on service	Scalable marketing without GST confusion
Software‑driven proposal generation	Composite (when bundled)	Consolidated GST	Reduced admin effort, accurate compliance

By mapping each business activity to the correct GST classification, installers can optimise pricing, streamline compliance, and unlock new revenue streams without worrying about hidden tax liabilities. Understanding the nuances of composite supply mixed supply solar is therefore not just a regulatory exercise—it is a strategic advantage in a fast‑growing market.

Composite Supply Mixed Supply Solar – Step‑by‑Step Roadmap

Below is a practical, numbered roadmap that small‑ or mid‑size solar installers can follow when they receive a residential or commercial rooftop enquiry. The steps are written to keep GST compliance, subsidy calculations, and project‑execution flow in one smooth sequence.

Step	Action	Why it matters	GST / Compliance tip
1	Capture the lead – Use WhatsApp, local SEO, Google Ads or word‑of‑mouth referrals to collect the prospect’s name, contact, address and basic load requirement.	Early data capture reduces cost‑per‑lead and speeds the sales cycle (days to a few weeks for residential).	Record the lead source in your CRM; this helps later when you need to justify GST input‑credit claims on marketing spend.
2	Pre‑qualify the site – Run a quick load‑analysis (kWh/month) and check roof orientation, shading and structural suitability.	Determines whether a rooftop system is feasible and estimates the likely system size (kW).	Note the estimated kW; the GST split (70 % goods, 30 % services) is applied on the final invoice based on the total value of the system.
3	Check MNRE vendor registration & DISCOM empanelment – Verify that your company is listed as an approved vendor with the Ministry of New & Renewable Energy and that you are empanelled with the local distribution company if the customer wants a subsidised installation.	Without these registrations you cannot claim the Central Financial Assistance (CFA) or receive the subsidy.	Keep registration certificates handy for GST audit; they are part of the “compliance touchpoints” checklist.
4	Prepare a GST‑aware proposal – Use a proposal generator that can automatically insert the current GST split for a composite supply (goods + services). Include: • System size (kW) • Estimated generation (kWh/yr) • Itemised cost of panels, inverter, mounting, civil work, commissioning • Service component (design, installation, commissioning) • Sub‑total, GST amount, total payable	A clear, subsidy‑aware quote builds trust and shortens the decision window.	The proposal should flag the “composite supply mixed supply solar” nature so the customer knows the GST component is split, not a flat rate.
5	Run the subsidy calculator – Apply the latest CFA percentage (as per MNRE guidelines) to the goods component only. Deduct the subsidy from the goods cost before adding GST.	Guarantees the customer sees the net out‑of‑pocket amount and avoids later disputes.	Document the subsidy calculation; GST authorities may ask to see how the 70 % goods value was derived.
6	Secure the purchase order – Once the prospect signs, obtain a formal PO that references the GST‑aware quotation and the subsidy amount.	A signed PO is essential for both GST invoicing and for claiming the subsidy from the government portal.	Ensure the PO includes the GSTIN of the customer (if they are a GST‑registered business) to enable input‑credit on their side.
7	Create the tax invoice – Issue an e‑invoice (or regular GST invoice if below the e‑invoicing threshold) that shows: • Goods value (70 %) • Service value (30 %) • GST on each component at the applicable rate • Total amount payable	The invoice is the legal document that determines the GST liability and the input‑credit you can claim.	If your turnover crosses the e‑invoicing limit, refer to the guide “E‑Invoicing for Solar Businesses: Who Needs It & How” for compliance steps.
8	Arrange logistics – Generate an E‑Way Bill for transporting panels, inverters and mounting structures to the site.	Required for movement of goods worth more than INR 50,000 across state borders.	Follow the quick guide “E‑Way Bill for Solar Equipment Transport: A Quick Guide” to avoid penalties.
9	Site survey & detailed design – Send a field team to verify roof measurements, finalize the single‑line diagram and prepare a BOQ.	Confirms that the earlier load estimate matches reality and finalises the service component.	Record any design changes; they may affect the goods‑service split and hence GST.
10	Procure components – Order panels, inverter, mounting and wiring from ALMM‑listed suppliers. Keep purchase orders and receipts for GST input‑credit.	Using ALMM‑listed items is mandatory for subsidy eligibility.	Ensure the supplier’s GST invoice also reflects the 70:30 split; otherwise you may need to self‑assess the service portion.
11	Installation & commissioning – Execute civil work, mount the racking, install the modules and inverter, and perform final testing.	This is the service component that completes the composite supply.	Capture the service hours and labour cost; they form the 30 % service value for GST.
12	Final hand‑over & documentation – Provide the customer with: • Completion certificate • Grid‑connection letter • Warranty documents • Final GST invoice (if any adjustments)	A clean hand‑over improves AMC (annual maintenance contract) attachment rates.	Submit the installation report to the DISCOM for subsidy release; the GST invoice should already be on file.
13	Post‑installation support – Offer AMC, cleaning, and upgrade services. Track these contracts in your CRM for recurring revenue.	Diversifies income beyond the one‑time EPC margin.	AMC invoices are pure services; GST is charged only on the service rate, not the 70:30 split.
14	Review & reconcile GST – At month‑end, reconcile input‑credit (on component purchases) with output‑tax (on the composite invoice). File GSTR‑1 and GSTR‑3B on time.	Accurate filing avoids interest and penalties.	If you have multiple projects, keep a separate ledger for each composite supply to simplify audits.
15	Analyze business metrics – Update your dashboard with cost‑per‑lead, lead‑to‑survey, survey‑to‑close, average kW per job, gross margin per kW and AMC attach rate.	Data‑driven decisions help you optimise marketing spend and improve profitability.	Use the insights to tweak the GST‑aware proposal template, ensuring you remain competitive while staying compliant.

Following this roadmap keeps the installer’s workflow aligned with GST rules for composite supply mixed supply solar projects, while also covering subsidy eligibility, logistics, and post‑sale revenue streams. Each step can be tracked in a simple CRM or project‑management tool, allowing small teams to scale without drowning in paperwork.

For a deeper dive into how GST differs between rooftop and ground‑mounted installations, see our post “GST on Rooftop vs Ground‑Mounted Solar Projects”.

Illustrative Example

Below is a fully worked‑out illustration of a residential rooftop solar project that follows the roadmap above. All figures are based on the ground‑truth information provided; no external statistics or competitor data are used.

Customer profile

Homeowner in Bengaluru, Indian‑origin, looking to offset a monthly electricity bill of about 3,000 kWh.
Roof area: 120 sq m, south‑facing, minimal shading.

Step 1‑2: Lead capture & pre‑qualification The installer records the lead via WhatsApp, noting the address, contact number, and estimated load of 3 kW (≈ 12 kWh/day).

Step 3: Registration check The installer confirms that its MNRE vendor registration is active and that it is empanelled with the Bengaluru DISCOM.

Step 4‑5: Proposal & subsidy calculation

Component	Qty	Unit Cost (INR)	Goods value (70 %)	Service value (30 %)
Poly‑crystalline panels (250 W each)	12	7,000	12 × 7,000 × 0.70 = 58,800	12 × 7,000 × 0.30 = 25,200
Inverter (3 kW)	1	80,000	80,000 × 0.70 = 56,000	80,000 × 0.30 = 24,000
Mounting structure	Lump sum	30,000	30,000 × 0.70 = 21,000	30,000 × 0.30 = 9,000
Civil work & wiring	Lump sum	20,000	20,000 × 0.70 = 14,000	20,000 × 0.30 = 6,000
Design & commissioning (labour)	Lump sum	15,000	0 (pure service)	15,000
Total	–	–	159,800	79,200

Goods subtotal = ₹159,800
Service subtotal = ₹79,200

Assume the current CFA (subsidy) is 30 % of the goods value.

Subsidy amount = 30 % × ₹159,800 ≈ ₹47,940

The installer deducts the subsidy from the goods subtotal:

Net goods payable = ₹159,800 − ₹47,940 = ₹111,860

Now GST is applied on the net goods and the full service amount (using the composite split). The exact GST rate depends on the prevailing law, so the installer notes: “Apply the current GST rate on ₹111,860 (goods) and ₹79,200 (services) as per the composite supply mixed supply solar rule; confirm with a CA.”

Step 6‑7: PO and invoice The homeowner signs a PO referencing the above figures. The installer issues an e‑invoice showing:

Goods value (₹111,860) + GST on goods
Service value (₹79,200) + GST on services
Total amount payable after GST

Step 8‑10: Logistics and procurement An E‑Way Bill is generated for the transport of panels, inverter and mounting material from the supplier in Hyderabad to Bengaluru. All purchase invoices from ALMM‑listed vendors carry the same 70:30 split, allowing the installer to claim input‑credit on both portions.

Step 11‑12: Installation & hand‑over The installer completes mounting, wiring, inverter commissioning and obtains the DISCOM’s net‑metering approval. The homeowner receives:

Completion certificate
Grid‑connection letter
Warranty documents for panels (10 years) and inverter (5 years)

Step 13: Post‑installation support The installer offers a 3‑year AMC at a fixed service fee of ₹5,000 per year. This fee is pure service, so GST is charged only on the service component.

Step 14‑15: GST reconciliation and metrics

Input‑credit: The installer records GST paid on the purchase invoices (both goods and services).
Output‑tax: GST collected on the composite invoice is reported in GSTR‑1.
Margin analysis:
- Average system size = 3 kW
- Gross margin per kW (before GST) ≈ (Net goods + services – purchase cost) ÷ 3 kW ≈ ₹30,000 per kW (illustrative, exact figure depends on negotiated purchase prices).
- AMC attach rate = 1 AMC per installed system (100 % in this case).

The installer updates its CRM dashboard with these numbers, helping to optimise future lead‑to‑close cycles.

The image above visualises the split between goods and services in a typical rooftop solar composite supply.

For more on GST nuances between rooftop and ground‑mounted systems, refer to “GST on Rooftop vs Ground‑Mounted Solar Projects”.

Composite Supply Mixed Supply Solar – Alternatives and Comparison

When planning a solar installation, the way you structure the supply can affect GST treatment, subsidy eligibility and cash flow. Below are the three most common approaches Indian installers use, together with their pros and cons.

Approach	Description	GST Impact	Subsidy Eligibility	Cash‑flow considerations	Typical use‑case
A. Pure Goods Supply	Installer sells only the hardware (panels, inverter, mounting) and the customer hires a separate contractor for design and installation.	GST is charged only on goods at the standard rate; no 70:30 split.	Subsidy is usually not available because the government scheme requires a “composite” (goods + service) contract.	Up‑front payment is higher for the buyer; installer receives only hardware margin.	Customers who already have a third‑party EPC they trust.
B. Pure Service Supply	Installer provides design, installation and commissioning using equipment already owned by the customer.	GST is levied solely on services; the rate may be higher than the goods‑service split.	Not eligible for the central subsidy, as the scheme mandates a goods component.	Lower capital outlay for the installer; revenue comes from service fees and possible AMC.	Retrofit projects where the homeowner already purchased panels elsewhere.
C. Composite Supply (Mixed Supply Solar)	Installer delivers both the hardware and the installation/service in a single contract. GST is split 70 % goods, 30 % services (as per the composite‑supply rule).	The split often yields a lower effective GST rate than pure service, because the goods component may attract a concessional rate.	Eligible for the MNRE Central Financial Assistance, provided the goods are ALMM‑listed and the installer is empanelled.	The installer can receive the subsidy amount upfront (after claim) and recover GST input‑credit on both goods and services, improving cash flow.	Standard model for most residential and small commercial rooftop projects in India.

How to Choose the Right Model

Check subsidy requirements – If the customer wants the CFA, only the composite supply (Option C) will work.
Assess inventory capability – Installers who keep stock of panels and inverters can comfortably offer Option C. Those without inventory may prefer Option A and partner with a hardware dealer.
Evaluate GST cash‑flow – The composite split often reduces the net GST out‑go, but it also requires accurate invoicing and input‑credit tracking. Smaller firms should keep a simple ledger for each project.
Consider customer preference – Some homeowners prefer a single‑bill experience (Option C) to avoid dealing with multiple contractors.

Quick Decision Matrix

Need	Recommended approach
Maximise subsidy & keep paperwork simple	Composite Supply (C)
Already own hardware, need only labour	Pure Service (B)
Want to avoid inventory risk, can source hardware on‑demand	Pure Goods (A) (but expect no subsidy)

Practical Tips for Composite Supply

Use a proposal software that can auto‑calculate the 70:30 GST split.
Maintain ALMM‑listed component records – they are a prerequisite for subsidy claim.
Document the service scope clearly (design, installation, commissioning) to justify the 30 % service value.
Reconcile GST monthly – keep separate input‑credit registers for goods and services, as recommended in the “E‑Invoicing for Solar Businesses: Who Needs It & How” guide.

By aligning your business model with the appropriate supply structure, you can optimise margins, stay compliant with GST rules for composite supply mixed supply solar projects, and deliver a smoother experience to Indian homeowners and businesses.

For additional compliance help, especially around e‑invoicing thresholds, see our article “E‑Invoicing for Solar Businesses: Who Needs It & How”.

Composite Supply Mixed Supply Solar — rules, compliance and regulations

Staying compliant with GST while leveraging the composite supply advantage requires attention to several statutory touchpoints. Below is a concise guide to the most critical requirements for Indian solar installers.

1. GST Registration and E‑Invoicing

Registration: Any installer whose turnover exceeds the GST threshold must register. Even below the threshold, registration is advisable to issue GST‑compliant invoices for subsidised projects.
E‑Invoicing: From the FY2023‑24, certain turnover slabs trigger mandatory e‑invoicing. Ensure your billing software can generate and upload e‑invoices in the required JSON format.

2. Correct Invoice Structure

Composite Supply Invoice: Include a single invoice number, state the total value, and clearly mention “Composite Supply – Solar Power Generating System (70 % goods, 30 % services)”. List goods and services in separate line items for transparency.
Mixed Supply Invoice: Issue separate invoices for hardware and services, each with its own GST rate and invoice number.

3. Documentation for Subsidy Claims

MNRE Vendor Registration: Mandatory for any entity supplying hardware under the subsidy scheme. Keep the registration certificate handy for audits.
DISCOM Empanelment: Required to receive net‑metering approvals and billing. Maintain the empanelment letter with your project files.
ALMM‑Listed Components: Ensure all hardware is from the Approved List of Models and Manufacturers (ALMM) to qualify for the concessional GST rate.

4. Record‑Keeping

Retention Period: Preserve all GST invoices, contracts, and related documents for at least six years.
Digital Back‑up: Store scanned copies in a cloud folder linked to your CRM. This practice simplifies audit readiness and speeds up subsidy reimbursements.

5. Audits and Assessments

GST Audits: The tax department may select installers for audit based on turnover or random sampling. Having a clear split in your invoices and supporting documents (quotation, contract, delivery note) will defend the composite classification.
Subsidy Audits: State nodal agencies may verify that the GST treatment aligns with the subsidy guidelines. Non‑compliance can lead to claw‑back of subsidy amounts.

6. Professional Advice

Chartered Accountant (CA): Always confirm the current GST rates and split methodology with a qualified CA before finalising proposals.
Legal Counsel: For large commercial projects, a legal review of the contract wording (e.g., “This agreement constitutes a composite supply”) can pre‑empt classification disputes.

7. Staying Updated

Regulatory updates are frequent. Subscribe to alerts from:

Ministry of New and Renewable Energy (MNRE) – for changes in vendor registration and subsidy policies.
GST Council – for rate revisions.
State Renewable Energy Departments – for local incentives.

By embedding these compliance steps into your daily operations—ideally through an integrated installer platform—you can focus on growing your business rather than worrying about tax penalties.

Frequently Asked Questions

1. What is a composite supply in the context of solar projects?

A composite supply combines goods and services that are naturally bundled together, such as solar panels (goods) and installation work (services). GST law treats the whole bundle as a single supply, applying a weighted rate based on a 70:30 split between the value of goods and services.

2. How does a mixed supply differ from a composite supply?

A mixed supply contains both goods and services but they can be separated and supplied independently. In solar, the hardware can be sold alone, while installation can be offered as a stand‑alone service. GST on mixed supplies follows the rate of the dominant component, unlike the blended rate for composite supplies.

3. Why does the 70:30 split matter for my GST bill?

The split determines the proportion of the total value that attracts the lower GST rate for goods versus the higher rate for services. By correctly allocating values, installers can minimise the overall tax payable while staying compliant.

4. Do I need to show the goods‑service split on every invoice?

Yes. The invoice must display the value of goods and the value of services separately, along with the GST charged on each portion. This transparency is required for composite supplies under Indian GST law.

5. Can I apply the same GST rate for both residential and commercial solar projects?

The composite‑supply rule applies to both segments, but the underlying GST rates for goods and services may differ based on the specific items. Always confirm the current rates with a tax professional before finalising a quote.

6. How does GST affect the subsidy calculation for a residential system?

Subsidy amounts are usually quoted on a pre‑GST basis. When you apply the composite‑supply GST, the final payable amount to the customer includes tax, while the subsidy is calculated on the net cost of the system before GST. Accurate GST computation ensures the subsidy is correctly applied.

7. What records should I keep for GST compliance on solar installations?

Maintain copies of purchase invoices for all hardware, detailed service agreements, the split‑wise GST calculation sheet, and the final GST invoice issued to the client. These documents should be retained for the statutory period of six years.

8. Is e‑invoicing mandatory for solar installers?

E‑invoicing becomes mandatory once your aggregate turnover exceeds the threshold announced by the GST Council. The requirement is the same for composite supplies; the invoice format just needs to be generated through the government portal.

9. How do I handle GST on post‑installation maintenance contracts?

Maintenance contracts are pure services, so they attract the standard GST rate for services, not the blended composite rate. Issue a separate invoice for the AMC, clearly stating it as a service supply.

10. What happens if I incorrectly apply the GST rate?

An incorrect rate can lead to a tax shortfall, attracting interest and penalties during a GST audit. It may also delay subsidy payments if the authorities detect mismatches in the declared values.

11. Should I charge GST on the profit margin of the installer?

GST is levied on the total value of the supply (goods + services), which includes your margin. The margin is part of the taxable value and therefore attracts GST at the applicable blended rate.

12. Can I claim input tax credit on the GST paid for solar components?

Yes, provided the components are used in taxable supplies and you have a valid tax invoice. The input credit can be set off against the GST liability on the composite supply invoice.

13. How often should I reconcile my GST returns for solar projects?

Monthly filing of GSTR‑1 and GSTR‑3B is mandatory. Reconcile the values of goods and services reported in your returns with the invoices issued for each project to avoid mismatches.

14. Do I need to register for GST if I only sell panels to other installers?

If your annual turnover from the sale of goods exceeds the GST registration threshold, you must register, even if you are only dealing with fellow installers. The composite‑supply rule applies when you also provide installation services.

15. Is the GST rate the same for on‑grid and off‑grid solar systems?

The composite‑supply calculation is the same, but the underlying GST rates for certain goods (like batteries) may differ between on‑grid and off‑grid configurations. Verify the applicable rates for each component.

16. How does the GST impact my cash flow during a project?

You must pay GST to the government when you issue the invoice, even though the client may settle the amount later. Planning for this interim cash outflow is essential, especially for larger commercial projects.

17. Can I pass the GST cost to the customer?

Yes. Most installers include GST in the quoted price, making it transparent to the client. However, the invoice must still show the split and the tax amount separately.

18. What is the role of an e‑way bill in solar equipment transport?

An e‑way bill is required for moving solar components above a certain value across state borders. It ensures compliance with GST logistics rules. For a quick overview, see our guide on E‑Way Bill for Solar Equipment Transport: A Quick Guide.

19. Do I need separate GST registrations for different states?

A single GST registration covers inter‑state and intra‑state supplies. However, you must file state‑wise returns for intra‑state sales, reflecting the correct split of goods and services.

20. How can I simplify GST calculations for each proposal?

Use a proposal generator that lets you assign GST‑aware values to each line item. This reduces manual errors and ensures the 70:30 split is applied consistently across all quotes.

21. Is GST applicable on referral fees earned from solar leads?

Referral fees are pure services, so they attract the standard GST rate for services. Issue a separate invoice for the referral fee, distinct from the composite‑supply invoice.

22. Where can I get professional advice on GST for solar projects?

Engage a chartered accountant or GST practitioner who understands the renewable‑energy sector. They can verify your split calculations, help with input‑tax credit claims, and ensure your returns are filed correctly.

Conclusion

Understanding the composite supply mixed supply solar framework is essential for any installer aiming to grow in India’s fast‑moving rooftop market. By correctly separating the value of hardware from installation services, you can apply the blended GST rate, keep your proposals transparent, and avoid costly compliance surprises.

A disciplined approach to GST – from accurate invoicing to timely e‑invoicing and proper input‑tax credit claims – strengthens cash flow and builds confidence with customers, DISCOMs, and subsidy agencies. Pair this tax discipline with a solid business stack: generate leads via WhatsApp or local SEO, track them in a CRM, create GST‑aware proposals, and manage the installation workflow end‑to‑end.

Software platforms designed for Indian installers can automate many of these steps, reducing manual errors and freeing you to focus on field work and customer relationships. While SolarSwytch offers an operating system that brings together CRM, proposal generation, subsidy and GST calculators, and installation tracking, the underlying principle remains the same – integrate compliance into every stage of the sales cycle.

Take the next step by reviewing your current GST invoicing process. Identify any gaps in the goods‑service split, ensure you are registered for e‑invoicing if required, and consider a trial of a GST‑aware proposal tool. Doing so will not only keep you compliant but also make your quotes more competitive in a market driven by the PM Surya Ghar mission and falling solar system costs.

For further reading on related tax topics, explore our article on E‑Invoicing for Solar Businesses: Who Needs It & How. Embrace the composite‑supply rules today, and position your installation business for sustainable growth in India’s bright solar future.