What is Accelerated Depreciation?
Under Section 32 of the Income Tax Act, solar power plants qualify for 40% accelerated depreciation in the first year of installation. This means a business can write off 40% of the system cost against taxable income in Year 1 alone.
How Much Does It Save?
| System Cost | 40% Depreciation Claim | Tax Saved (30% bracket) | Effective System Cost |
|---|---|---|---|
| ₹10,00,000 | ₹4,00,000 | ₹1,20,000 | ₹8,80,000 |
| ₹25,00,000 | ₹10,00,000 | ₹3,00,000 | ₹22,00,000 |
| ₹50,00,000 | ₹20,00,000 | ₹6,00,000 | ₹44,00,000 |
Other Tax Benefits for Commercial Solar
- GST Input Tax Credit (ITC) on solar system purchase if GST-registered
- Power purchase savings reduce taxable profit indirectly
- No GST on solar panels (0% rated)
- State-level incentives from TEDA (Tamil Nadu Energy Development Agency)
Combine the 40% accelerated depreciation with PM Kusum commercial subsidy and your effective ROI can drop to under 2 years for systems above 25 kW.
How to Claim
The depreciation is claimed in your annual ITR filing. Your CA files it under Schedule DPM. Heliostrom provides all necessary documentation (installation certificate, commissioning report, invoice) for your tax filing.
