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Section 32 Depreciation for Solar
For commercial solar installations — calculate your 40% accelerated depreciation tax shield.
PM-Surya Ghar
Yojana
Claim up to ₹78,000 direct benefit for your home. Valid across all Indian States.
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Investment Inputs
Estimated Tax Savings
Depreciation
₹4,00,000
WDV
₹6,00,000
How Solar Depreciation Works Under Section 32
Section 32 of the Income Tax Act, 1961 allows businesses to claim accelerated depreciation on renewable energy assets, including solar photovoltaic (PV) systems. This is one of the most powerful tax incentives for Indian businesses investing in clean energy.
What is Accelerated Depreciation?
Normal plant and machinery depreciates at 15% per year on Written Down Value (WDV). Solar energy systems qualify for 40% depreciation in the first year — nearly 3x the standard rate. This allows businesses to write off a significant portion of the investment immediately, reducing their taxable income.
Who Can Claim This Benefit?
- Any business with taxable income — sole proprietors, partnerships, LLPs, and companies
- The solar system must be owned by the business (not leased or rented)
- Must be used for business purposes — powering office, factory, or commercial operations
- Available for both rooftop and ground-mounted solar installations
Installation Date Matters
If the solar system is installed before October 4th of the financial year, you get the full 40% depreciation. If installed after October 3rd, the rate is halved to 20% for that year. From the second year onwards, the full 40% rate applies on the remaining WDV.
Example Calculation
A business invests ₹10 Lakhs in rooftop solar before October:
- Year 1 Depreciation: ₹10,00,000 x 40% = ₹4,00,000
- Tax Savings (at 25% slab): ₹4,00,000 x 25% = ₹1,00,000
- Annual electricity savings: approximately ₹1,50,000 - ₹2,00,000
- Effective payback period: 3-4 years
Frequently Asked Questions
What is 40% accelerated depreciation on solar panels?
Under Section 32 of the Income Tax Act, businesses can claim 40% accelerated depreciation on the Written Down Value (WDV) of solar PV systems in the first year itself, significantly reducing taxable income and providing immediate cash flow benefits.
How much tax can I save by installing solar panels in India?
A business investing ₹10 Lakhs in solar can save up to ₹1.2 Lakhs in tax in the first year through 40% depreciation under the 30% tax slab. The exact savings depend on your investment amount and corporate tax rate. Use our calculator above for precise estimates.
What is PM-Surya Ghar Yojana subsidy for solar?
PM-Surya Ghar Yojana provides up to ₹78,000 as a direct benefit transfer (DBT) for residential rooftop solar installations. This is available to homeowners across all Indian states through the national portal. Note: this subsidy is for residential use, while Section 32 depreciation is for businesses.
What depreciation rate applies if solar is installed after October 4th?
Solar systems commissioned after October 3rd of the financial year receive a 20% depreciation rate (half of 40%) for the initial year. From the second year onwards, the full 40% WDV rate applies. Planning your installation date can maximize first-year tax benefits.
Can I claim both solar subsidy and depreciation?
The PM-Surya Ghar subsidy is for residential installations, while Section 32 depreciation is for business/commercial installations. They apply to different categories of buyers. For businesses, the depreciation benefit combined with electricity bill savings provides an excellent ROI of 20-25% annually.
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