1. Central Financial Assistance (CFA) / Subsidy for Rooftop Solar The Ministry of New and Renewable Energy (MNRE) offers a direct capital subsidy for residential rooftop solar systems. Currently, households can receive up to 40% subsidy for systems up to 3 kW and around 20% for systems between 3 to 10 kW. This dramatically lowers the upfront cost of going solar. However, it’s applicable only through registered vendors under the national solar portal and for grid-connected residential systems.
2. Pradhan Mantri Surya Ghar Muft Bijli Yojana Launched in 2024, this scheme aims to install rooftop solar on one crore homes across India, providing up to 300 units of free electricity per month. It includes a simplified online application process and upfront financial support, targeting middle- and lower-income households. The key benefit is access to solar with little or no financial burden. However, the rollout is state-dependent, and users must apply through official government portals to avail the subsidy.
3. PM-KUSUM Scheme (Kisan Urja Suraksha evam Utthaan Mahabhiyan) This initiative is focused on farmers and agricultural applications. It provides financial support to install standalone solar pumps, solarize existing grid-connected pumps, and establish small-scale solar plants on barren land. Subsidy support under this scheme can go up to 60–70% with central and state sharing. The aim is to reduce diesel dependency in farming and generate extra income through sale of excess power. However, access depends on local agricultural departments and requires land or pump ownership.
4. Tax Incentives: Accelerated Depreciation and Reduced GST For commercial and industrial users, the government offers accelerated depreciation benefits under the Income Tax Act, allowing businesses to depreciate up to 40% of their solar asset’s value in the first year, significantly lowering taxable income. Additionally, solar components enjoy a reduced GST rate of 5%. These fiscal benefits make solar attractive for businesses seeking faster ROI. Residential users, however, do not benefit from this provision.
5. Net-Metering and Feed-in Tariffs Net-metering allows residential and commercial solar users to export excess electricity to the grid and receive credits that offset their electricity bills. Feed-in tariffs may also be available in some states, where users are paid for the solar power they send back to the grid. This mechanism maximizes the value of your solar investment. The challenge is that policies differ between states and distribution companies, so it’s important to confirm specific guidelines with your local DISCOM.
6. State-Level Subsidies and Incentives In addition to central schemes, many states offer their own top-up subsidies, rebates, or incentives. For instance, Gujarat provides up to ₹20,000/kW as an extra subsidy for rooftop solar; Maharashtra and Kerala offer additional incentives or tax benefits to encourage adoption. These can be combined with central subsidies in some cases, greatly improving cost savings. The terms, rates, and eligibility criteria vary, so applicants should check their respective State Renewable Energy Development Agencies (SREDAs) for accurate and current details.
