4, 5 and 10 kW rooftop solar: GST, benchmark cost and a subsidy that stops at 3 kW

A customer with a big bill asks for 5 kW. They have heard "subsidy milegi" and assume it grows with the system. It doesn't: the central subsidy stops at 3 kW, while GST keeps growing with the price. Whether each kW above 3 is a good buy depends on one thing the customer rarely knows: which slab those units would otherwise be billed at.

This post gives the numbers at 3, 4, 5 and 10 kW, the GST lines on a bigger quote, and the payback on the extra kW for five tariffs.

The numbers by size

At MNRE's benchmark cost of ₹50,000 per kW up to 2 kW and ₹45,000 per kW above that (MNRE scheme guidelines, effective 13 February 2024, verified). The guidelines do not say whether the benchmark includes GST, so we add GST on top at the blended 8.9% (Notification 9/2025-Integrated Tax (Rate), effective 22 September 2025, verified). The central subsidy is capped at ₹78,000 (same guidelines, verified).

• 3 kW: ₹1,45,000 + ₹12,905 GST = ₹1,57,905. Subsidy ₹78,000. Customer pays ₹79,905.
• 4 kW: ₹1,90,000 + ₹16,910 GST = ₹2,06,910. Subsidy ₹78,000. Customer pays ₹1,28,910.
• 5 kW: ₹2,35,000 + ₹20,915 GST = ₹2,55,915. Subsidy ₹78,000. Customer pays ₹1,77,915.
• 10 kW: ₹4,60,000 + ₹40,940 GST = ₹5,00,940. Subsidy ₹78,000. Customer pays ₹4,22,940.

The subsidy covers 49.4% of the 3 kW total, 30.5% at 5 kW and 15.6% at 10 kW.

The benchmark is a reference, not a market price. The guidelines define only two bands, so every kW above 2 is costed at ₹45,000. Your own price will differ.

How the GST line works on a bigger quote

The 70:30 split is the same at every size: 70% of the contract is treated as goods at 5%, and 30% as services at 18%. On a 5 kW contract of ₹2,35,000:

• Goods, 70%: ₹1,64,500 at 5% = ₹8,225
• Services, 30%: ₹70,500 at 18% = ₹12,690
• Total GST: ₹20,915, which is 8.9%

Within a state, each line splits into equal CGST and SGST halves. Our GST post shows the invoice lines, and the GST tool does the split for any contract value.

What each kW above 3 costs, and what it earns

Every kW above 3 costs ₹45,000 at benchmark, plus 8.9% GST: ₹49,005, with no subsidy.

Our rates file plans on 4 units per kW per day, a figure no government source confirms as an annual average. At that rate, the extra kW makes about 120 units a month. At best, those units are worth the customer's top energy slab. From the FY 2026-27 tariffs in our rates file, all verified:

• Torrent Power, Ahmedabad, top slab ₹5.00: ₹600 a month, paid back in about 6.8 years.
• Gujarat's four state DISCOMs, urban top slab ₹5.20: ₹624 a month, about 6.5 years.
• UP's state DISCOMs, urban top slab ₹6.50: ₹780 a month, about 5.2 years.
• MP's three DISCOMs, top slab ₹7.24: ₹868.80 a month, about 4.7 years. MP's fixed charge also moves with the units drawn from the grid, ₹30 for every 15 units above 150, which this leaves out.
• MSEDCL, 301 to 500 unit slab at ₹15.03 plus ₹1.60 wheeling: ₹1,995.60 a month, about 2 years.

The catch: the first 3 kW takes the expensive units

Solar set off against consumption removes units from the top of the bill down. So the first 3 kW, about 360 units a month, already takes out the costliest units. The fourth kW only earns the top-slab rate if the home is still importing at least 120 units in that slab after the first 3 kW. That takes about 680 units a month on Torrent Ahmedabad, 730 on the Gujarat state DISCOMs, and 780 on UP, MP or MSEDCL's 301 to 500 slab.

A worked example below that line. An MSEDCL home uses 600 units a month. Its bill is ₹8,405, before fuel adjustment and duty. With 3 kW it falls to ₹2,422. With 5 kW it falls to the ₹130 fixed charge, assuming wheeling is charged on net units only. The extra 2 kW cost ₹98,010 at benchmark and save ₹2,292 more a month. Payback: about 43 months, or 3.6 years, not two.

If the extra units are exported instead of set off, they earn the DISCOM's surplus rate, which is far below the slab rate. On Torrent Power Ahmedabad it is ₹2.25 a unit for the first five years (Torrent interconnection agreement, clause 7.2); check your own DISCOM's rate.

Quote the payback from the customer's own units and tariff, not from a rule of thumb.

Roof and phase

MNRE's figure is 10 to 12 square metres of shadow-free roof per kW, which is 108 to 129 square feet (MNRE FAQ, via PIB, verified):

• 4 kW: 432 to 516 sq ft
• 5 kW: 540 to 645 sq ft
• 10 kW: 1,080 to 1,290 sq ft

Check the phase too. Gujarat's GERC schedule defines single-phase supply as an aggregate load up to 6 kW, and our rates file confirms that threshold for Gujarat only. If a larger system comes with a load increase that takes the connection past the single-phase limit (6 kW in Gujarat; check your state's supply code elsewhere), it becomes three-phase and the fixed charge moves: from ₹25 to ₹65 a month on Torrent Ahmedabad, and from ₹130 to ₹435 on MSEDCL.

How to present it on the quote

• One contract, one GST treatment. The 70:30 split applies to the whole contract value, not to the subsidised part only.
• Two lines of reasoning. Show the first 3 kW with its subsidy, then each extra kW at ₹49,005 with no subsidy, and its payback on the customer's own tariff.
• Let the customer choose. A family on a steep tariff will take the extra kW. A family on a flat one may be better off at 3 kW and the rest of the money in the bank.

What goes wrong above 3 kW

• Subsidy promised per kW beyond 3. It stops at ₹78,000.
• Sizing to the roof, not the bill. A system bigger than the home's use exports units at the surplus rate, not the slab rate.
• Three-phase costs forgotten. Check the connection before you price the meter work.
• GST quoted at 5% on the whole contract. The blended rate is 8.9% at every size.

Frequently asked questions

Does a 5 kW system get more subsidy than 3 kW?

No. A household gets ₹78,000 for any system of 3 kW and above.

Is GST different above 3 kW?

No. The 70:30 split gives 8.9% at every size, so the GST grows in step with the price.

How much roof does a 5 kW system need?

About 540 to 645 square feet of shadow-free area, from MNRE's 10 to 12 square metres per kW.

When is a 5 kW system worth it?

When the extra units would otherwise be billed in a high slab. In an MSEDCL home using 780 units or more, the fourth kW pays back in about two years. In a 600-unit MSEDCL home it takes about three and a half. On a Torrent Ahmedabad bill it takes nearer seven.

Size from the customer's own units with the bill-to-kW tool, then price any size in the solar cost calculator.