---
title: Accelerated Depreciation on Solar 2026 | Arrays Ingenieria
description: A business that owns its solar plant can claim 40% depreciation on written-down value. How it works under the Income-tax Act, 2025, with an example.
url: https://arraysingenieria.com/accelerated-depreciation-solar/
last_updated: 2026-10-11
source: Arrays Ingenieria (Arrays Ingenieria Pvt. Ltd.)
---

Guide · Tax

# Accelerated Depreciation on Solar in India: How a Business Recovers the Cost Faster

Owning your solar plant lets you write it off at 40% a year on the written-down value. How accelerated depreciation works from April 2026 under the new Income-tax Act, the half-year rule, and a worked example.

On this page

- What accelerated depreciation means
- What changed in April 2026: the Income-tax Act, 2025
- Who can claim it
- Worked example: a Rs 1 crore plant
- Putting it together with GST and power savings
- Frequently asked questions
- Sources

By the [Arrays Ingenieria engineering team](https://arraysingenieria.com/about/) · Updated 11 Oct 2026 · 3 min read

**Key takeaways**

- Solar power generating systems sit in the renewable-energy block of the depreciation schedule at **40% on the written-down value (WDV)**
- The **Income-tax Act, 2025** applies from **1 April 2026**; the 40% rate for qualifying solar assets is reported to continue under it
- Only the **owner** of the plant claims it, which is why it matters for the CAPEX model and not for OPEX or PPA deals
- An asset used for less than 180 days in its first year gets half the year's depreciation
- On a Rs 1 crore plant, about Rs 78 lakh is written off in the first three full years

## What accelerated depreciation means

Depreciation is the deduction a business takes each year for the wear of an asset it owns. Ordinary plant and machinery is written off at 15% a year on the written-down value. Renewable-energy devices, including **solar power generating systems**, are allowed a much higher rate: **40% a year on WDV**. Because the deduction lowers taxable profit, the plant pays back part of its own cost through tax savings in the first few years.

## What changed in April 2026: the Income-tax Act, 2025

India's new **Income-tax Act, 2025** replaced the 1961 Act from **1 April 2026**. It uses the idea of a "tax year" and renumbers the sections: the depreciation provision that was Section 32 now sits elsewhere in the new Act (reported as Section 34). Tax commentators report that the depreciation schedule for renewable-energy devices, including the 40% rate for qualifying solar assets, continues.

**Confirm with your chartered accountant**

The new Act's schedule, rules and transition provisions decide the exact block, rate and conditions for your assets. Matters for years before 1 April 2026 stay under the 1961 Act. Check your position before you rely on the figures in this guide.

## Who can claim it

- The **owner** of the plant, using it for business: a factory, warehouse, hospital, school run as a business, tea estate or commercial building.
- Not the consumer in an OPEX, RESCO or PPA arrangement, where the developer owns the plant and claims the depreciation itself.
- Not households, which do not compute business income on their homes; for them PM Surya Ghar's subsidy is the support.

That is the single biggest financial difference between owning a plant (CAPEX) and buying its power (OPEX). See [CAPEX vs OPEX solar](https://arraysingenieria.com/capex-vs-opex-solar/).

## Worked example: a Rs 1 crore plant

Assume a company installs a plant costing **Rs 1 crore** (net of any input tax credit), puts it to use early in the year (more than 180 days), and pays tax at an effective **25.17%** (the 22% concessional corporate rate plus surcharge and cess).

Depreciation at 40% WDV on a Rs 1 crore solar plant (illustrative)

| Year | Opening WDV | Depreciation at 40% | Tax saved at 25.17% | Cumulative tax saved |
| --- | --- | --- | --- | --- |
| Year 1 | Rs 100.0 lakh | Rs 40.0 lakh | Rs 10.1 lakh | Rs 10.1 lakh |
| Year 2 | Rs 60.0 lakh | Rs 24.0 lakh | Rs 6.0 lakh | Rs 16.1 lakh |
| Year 3 | Rs 36.0 lakh | Rs 14.4 lakh | Rs 3.6 lakh | Rs 19.7 lakh |
| Year 4 | Rs 21.6 lakh | Rs 8.6 lakh | Rs 2.2 lakh | Rs 21.9 lakh |
| Year 5 | Rs 13.0 lakh | Rs 5.2 lakh | Rs 1.3 lakh | Rs 23.2 lakh |

Roughly a fifth of the plant's cost comes back as tax saved within five years, on top of the savings on the power bill. If the plant is commissioned late in the year and used for less than 180 days, year one's deduction halves to Rs 20 lakh and the rest carries forward in the WDV.

**Timing tip**

Because of the 180-day rule, commissioning in the first half of the financial year (before early October) can double the first-year deduction compared with commissioning in the last quarter. Plan the project schedule with your finance team.

## Putting it together with GST and power savings

For a business owner, the full picture of a solar plant's return has three parts:

- **Power savings:** every unit generated replaces a unit bought from the grid at your commercial or industrial tariff.
- **Tax savings:** 40% WDV depreciation reduces tax in the early years.
- **Lower upfront cost:** GST on solar equipment is 5% and, for most businesses, recoverable as input tax credit (see [GST on solar](https://arraysingenieria.com/gst-on-solar-india/)).

With all three, payback for a well-sited C&I plant is often in the range of three to five years, after which the plant keeps generating for two decades more.

Want a payback estimate with depreciation built in? Send us your last 12 power bills.

[Get a free solar quote](https://arraysingenieria.com/free-solar-quote/)

## Frequently asked questions

What is the depreciation rate on solar panels in India?

Solar power generating systems are in the renewable-energy block at 40% on the written-down value, for business owners.

Does accelerated depreciation continue under the Income-tax Act, 2025?

The new Act applies from 1 April 2026, and commentators report that the 40% rate for qualifying solar assets continues under its depreciation schedule. Confirm the exact provision and conditions with your chartered accountant.

Can I claim depreciation on a solar plant under a PPA?

No. Under a PPA or OPEX model the developer owns the plant and claims the depreciation. You claim it only if you own the plant (CAPEX).

What is the 180-day rule?

An asset put to use for less than 180 days in the year of acquisition gets only half of that year's depreciation. The remainder is claimed in later years.

## Sources

- [Taxguru: Depreciation under the Income-tax Act, 2025](https://taxguru.in/income-tax/depreciation-income-tax-act-2025-section-34-rates-provisions.html)
- [pv magazine India, 4 Sep 2025: GST on solar cells, modules cut to 5%](https://www.pv-magazine-india.com/2025/09/04/gst-on-solar-cells-modules-cut-to-5/)

This guide explains public policy in plain language for planning purposes. Rules, rates and deadlines change: confirm the current position with the notifying authority, your DISCOM and your tax adviser before you commit. Last checked 11 Oct 2026.

**About the authors.** Arrays Ingenieria is an ex-servicemen-led solar EPC and installation & commissioning company working Pan-India, from Assam's tea estates to industrial rooftops. [Our story](https://arraysingenieria.com/ex-servicemen-led-msme/) · [Our projects](https://arraysingenieria.com/projects/)

[CAPEX Solar EPC](https://arraysingenieria.com/capex-solar-epc/)

From Our Sites

## Case Studies on This Topic

Real plants our veteran-led crews have built, with the scope of work in detail.

[Industrial · Rooftop: **Super Smelters: 1980.3 kWp Rooftop Solar Plant**1980.3 kWp (about 2 MW) · Jamuria (Asansol), West BengalRead the case study](https://arraysingenieria.com/project-super-smelters-1980kwp-rooftop-solar/)[Industrial · Rooftop I&C: **SRMB Steel, Durgapur: Rooftop Solar I&C in Three Phases**1895.4 kWp, 1060 kWp and 1.69 MWp · Durgapur, West BengalRead the case study](https://arraysingenieria.com/project-srmb-steel-durgapur-rooftop-solar/)[Industrial · Rooftop I&C: **Apar Industries, Jharsuguda: 1.2 MWp Rooftop Solar I&C**1.2 MWp (1203 kWp) · Jharsuguda, OdishaRead the case study](https://arraysingenieria.com/project-apar-industries-jharsuguda-1-2mwp-rooftop-solar/)

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