Commission in September or your customer loses half the tax break

Every commercial rooftop proposal you send has a number on it that most EPCs never mention, and it is often larger than the first three years of electricity savings put together.

It is also the only number in the proposal that has a date attached.

What accelerated depreciation actually gives

Under Section 32 of the Income Tax Act, a business can depreciate a solar power plant at 40 percent of written down value, against the much slower rate that ordinary plant and machinery gets. The deduction reduces taxable profit, so the benefit arrives as tax not paid.

Take a 100 kW system at Rs 40 lakh. A 40 percent first year deduction is Rs 16 lakh. For a company taxed at 30 percent, that is roughly Rs 4.8 lakh of tax saved in year one, on top of every unit of electricity the system generates.

That is the part worth putting in front of a factory owner, because it changes the payback conversation from a five year story to something closer to three.

The date that halves it

Here is the part nobody explains until it is too late.

The full rate applies only if the asset is put to use for 180 days or more within that financial year. Commission it with fewer than 180 days left before 31 March and the year one rate drops to half: 20 percent instead of 40.

The Indian financial year ends on 31 March, so counting 180 days backwards lands in the first days of October. The safe planning date, and the one every CA will give you, is 30 September.

On our Rs 40 lakh example, that timing difference is Rs 8 lakh of deduction rather than Rs 16 lakh, and roughly Rs 2.4 lakh of tax saved instead of Rs 4.8 lakh. The remaining depreciation is not lost, it simply arrives in later years, but a rupee of tax saved this year is worth more than the same rupee three years out, which is the whole point of accelerated depreciation.

What this does to your September and October

Two practical consequences, and they point in opposite directions.

Before the cut-off, it is the strongest closing argument you have, and it is an honest one. A customer sitting on a signed quotation in the second week of September is deciding, without realising it, whether to take a deduction this year or next. Say so plainly, in writing, with the arithmetic on their own numbers.

After the cut-off, do not pretend it did not happen. A customer who finds out in March that a fortnight's delay cost them lakhs will remember which vendor let the date slip quietly. The honest move in October is to say that the year one benefit is now at the half rate, and that the full rate is available again on anything commissioned by 30 September next year. Some customers will still proceed. Some will plan for next September, which is a real pipeline rather than a lost deal.

The operational lesson underneath

The date does not care when the customer signed. It cares when the plant was put to use, which means commissioned, inspected and generating.

So the binding constraint is not your sales cycle, it is your delivery cycle: material availability, DISCOM inspection scheduling, meter installation. An EPC who signs a 200 kW job on 20 September and cannot commission it before the month ends has not given the customer the benefit they sold.

Which means three things from mid August onwards each year:

• Stop promising the full rate on jobs you cannot commission in time. Quote it as available if commissioning completes by 30 September, and say what has to happen for that to hold.
• Front-load the paperwork. Feasibility, sanction and inspection scheduling are the steps that slip, not the installation.
• Keep a short list of jobs that are close. The ones sitting at 80 percent in the second week of September are where a day of chasing pays more than a week of prospecting.

What goes in the proposal

One line under the price, not a page. Something like: system cost, the depreciation the customer can claim in year one at 40 percent, the approximate tax effect at their rate, and the sentence that it applies only if the plant is commissioned and in use by 30 September.

Then the cash flow table with and without it. The gap between those two columns closes more commercial deals than any efficiency figure on a module datasheet.

What else belongs on that page is covered in what actually goes in a solar proposal, and the tax line itself in GST on solar is 5 percent.

The short version

• Section 32 allows 40 percent depreciation on written down value for a solar plant, deducted from taxable profit.
• The full rate needs the asset in use for 180 days in that financial year. Counting back from 31 March, the safe date is 30 September.
• Miss it and year one drops to 20 percent. On a Rs 40 lakh system that is roughly Rs 2.4 lakh of tax saved instead of Rs 4.8 lakh.
• Commissioned, not signed, is what counts. Your delivery cycle is the constraint.
• Present the mechanism and the date. Let their CA confirm the number.
• After the cut-off, say so honestly and build next September's pipeline.

Sources

• Accelerated Depreciation on Solar India: 40% Tax Benefit, Heaven Green Energy, trade guidance
• Accelerated Depreciation on Solar Panels, 2026 guide, SolarSquare
• Solar Investment Tax and Policy Guide, India 2026, Wattency