Tax is one of the least glamorous line items in a storage budget and one of the easiest to get wrong. Buyers who have been through a rooftop solar purchase often assume batteries inherit solar’s concessional treatment. They do not. This guide sets out what the tax actually is, in plain terms, and what changed recently.
GST on batteries: one rate, 18%
Batteries fall under HSN heading 8507. HSN (Harmonised System of Nomenclature) is the international code system that decides which GST rate a product attracts.
Under the GST 2.0 rate rationalisation announced in September 2025, every battery under heading 8507 was brought to a single 18% rate. That was not a cut for lithium-ion, which was already at 18%. It was a cut for the other chemistries — lead-acid inverter batteries among them — which had been sitting at 28%.
The India Energy Storage Alliance, the industry body, welcomed the change specifically because it gave non-lithium technologies what its president described as a level playing field after years at the higher rate.
Why your solar-plus-storage quote has two tax rates
This trips up a lot of first-time buyers. Renewable energy devices attract a concessional GST rate. Batteries do not qualify for it.
So on a combined quote, the solar equipment and the battery are taxed on separate line items at separate rates. If a supplier shows you a single blended tax figure across the whole package, ask for the split. It matters for your input tax credit position and it matters when you compare two quotes that have bundled things differently. We cover the wider cost picture in our guide to what a BESS costs in India, and the support schemes that offset it in our BESS subsidies overview.
Customs duty: the action is on manufacturing equipment
The second half of the tax story is import duty, and here the direction of travel has been consistently downward — but aimed at making cells in India, not at importing finished systems.
Union Budget 2026-27 extended the basic customs duty (BCD) exemption already available on capital goods for lithium-ion cell manufacturing so that it also covers battery energy storage systems. BCD is the headline import tax charged on goods entering India.
Then, on 8 July 2026, CBIC (the Central Board of Indirect Taxes and Customs) issued Notification No. 27/2026-Customs, which replaced the earlier scattered equipment entries with a single consolidated list of 85 specific machine types eligible for duty-free import. The list runs across the whole cell production line — coating, compression, winding, filling, sealing, formation, welding, testing, inspection and packaging equipment among them.
Two features of that notification matter commercially:
- The end-use restriction went away. Earlier exemptions tied the benefit to particular downstream applications. The consolidated framework supports cells used across electronics, mobility and grid-scale storage alike.
- It has a runway. The concessional regime is set to remain in force until 31 March 2029, which gives a gigafactory investment decision a visible policy horizon rather than a one-year window.
| What is being taxed | Treatment |
|---|---|
| Battery, any chemistry (HSN 8507) | 18% GST |
| Solar equipment on the same invoice | Concessional renewable-device rate — not the battery rate |
| Capital goods for lithium-ion cell manufacturing | BCD exempt, 85 machine categories, to 31 Mar 2029 |
| Critical mineral inputs (lithium oxide, hydroxide, carbonate) | Duty relief extended under Budget 2026-27 |
This is the same policy logic behind the production-linked incentive programme, which we cover in our PLI scheme explainer — bring the cell into India, and the landed cost of everything downstream falls. You can see how that shapes the systems we build on our manufacturing page and across our product range.
What this means for you
- If you are a C&I (commercial and industrial) buyer: budget the battery at 18% GST and make sure your quotes separate battery tax from solar tax. If you are GST-registered and the storage serves your business, that input tax credit is usually recoverable — talk to your finance team early, because it changes the real payback materially.
- If you are a developer or IPP: the customs changes do not reduce the duty on importing a finished container. They reduce the cost of building cells here. Factor that into any make-versus-buy assessment on a multi-year pipeline.
- If you are evaluating suppliers: a manufacturer investing in Indian cell or pack lines is operating under a duty regime with visibility to March 2029. That is a reasonable question to ask about supply security.
Tax rates, exemption lists and notification scope change by government notification — GST rates are set by the GST Council and customs entries by CBIC, and both have moved more than once in the past two years. Treat every figure here as an August 2026 snapshot and confirm current provisions with your tax adviser and the live CBIC notifications before committing capital. To see what the tax-inclusive numbers look like for your own site, try our BESS savings calculator, or get in touch with our team.
Tax snapshot as of August 2026. GST rates and customs notifications change by notification; verify current provisions with CBIC and GST Council documents and a qualified tax adviser before financial decisions.