Government Subsidies for Rooftop Solar in 2026

If you are considering rooftop solar in Tamil Nadu, the single biggest factor in your favour is the range of government subsidies and financial incentives available in 2026. Between central schemes, state programmes, tax benefits, and financing support, the effective cost of going solar has never been lower.

This guide covers every major subsidy and incentive programme available for rooftop solar installations in India, with specific attention to Tamil Nadu residents and businesses. Whether you are a homeowner looking at a 3 kW system or an industrial unit planning a 100 kW installation, there is a scheme that applies to you.

For a detailed walkthrough of the residential subsidy application process, see our dedicated guide: How to Get the Rs.78,000 Solar Subsidy in Tamil Nadu.

1. PM Surya Ghar Muft Bijli Yojana (Central Residential Subsidy)

The PM Surya Ghar Muft Bijli Yojana is the flagship central government scheme for residential rooftop solar. Launched in February 2024 with a total outlay of Rs.75,021 crore, the scheme has already crossed 26 lakh installations nationwide as of March 2026.

Subsidy Amounts

System Size	Subsidy Rate	Total Subsidy
1 kW	Rs.30,000 per kW	Rs.30,000
2 kW	Rs.30,000 per kW	Rs.60,000
3 kW	Rs.30,000/kW for first 2 kW + Rs.18,000/kW for 3rd kW	Rs.78,000
4 kW and above	Fixed (capped at 3 kW)	Rs.78,000

Important: The subsidy caps at Rs.78,000 regardless of system size. A 3 kW system is the optimal size for maximum subsidy value relative to cost.

Eligibility Criteria

Requirement	Details
Connection type	Domestic/residential TANGEDCO connection only
Property ownership	Must own the property where panels are installed
Existing solar	No prior solar subsidy claimed on the same connection
Panel type	Must use DCR (Domestic Content Requirement) solar panels
Installer	Must use a MNRE-empanelled vendor
Bank account	Aadhaar-linked bank account for DBT

DCR panels are mandatory for subsidy eligibility. Read our explanation of why DCR panels are required for TANGEDCO subsidy approval.

Application Process

Register at pmsuryaghar.gov.in using your TANGEDCO consumer number and Aadhaar
Select a vendor from the MNRE-empanelled list (Tristar Green Energy Solutions is an empanelled installer in Tamil Nadu)
Get feasibility approval from TANGEDCO for net metering
Install the system through your chosen vendor
Upload commissioning report and net meter installation certificate on the portal
Receive subsidy via Direct Benefit Transfer within 30 days of verification

For the full step-by-step walkthrough with screenshots and troubleshooting tips, see How to Apply for PM Surya Ghar Yojana. If your application has been rejected, our guide on common subsidy rejection reasons and how to fix them covers every scenario we have encountered.

2. MNRE Grid-Connected Rooftop Solar Programme

The Ministry of New and Renewable Energy (MNRE) administers the broader Grid-Connected Rooftop Solar Programme with a target of 40 GW cumulative rooftop solar capacity by March 2026. While the residential subsidy is delivered through PM Surya Ghar Yojana, MNRE sets the technical standards, vendor empanelment criteria, and programme guidelines that govern all subsidised installations.

What MNRE Controls

Technical specifications for panels, inverters, and mounting structures
Vendor empanelment criteria and compliance requirements
Net metering regulations in coordination with state electricity regulatory commissions (TNERC in Tamil Nadu)
Quality benchmarks including BIS certification requirements for all components

For commercial and industrial installations, MNRE does not provide direct capital subsidies. However, MNRE-compliant installations are required to access other benefits like accelerated depreciation and TEDA incentives.

3. TEDA (Tamil Nadu Energy Development Agency) Incentives

TEDA is the state nodal agency for renewable energy in Tamil Nadu. It functions as the implementation arm for both central and state solar programmes within Tamil Nadu.

TEDA's Role in Subsidy Processing

Maintains the list of empanelled solar vendors for Tamil Nadu
Processes state-level approvals for rooftop solar installations
Coordinates with TANGEDCO for net metering approvals
Channels MNRE subsidies to Tamil Nadu beneficiaries

Chief Minister's Solar Rooftop Capital Incentive Scheme

Tamil Nadu has historically operated the Chief Minister's Solar Rooftop Capital Incentive Scheme, which offered Rs.20,000 per kW for small residential systems (primarily 1 kW). As of 2026, the central PM Surya Ghar Yojana has largely superseded this scheme for residential installations with its higher subsidy amounts.

TEDA Empanelment Requirements

To install a subsidised solar system in Tamil Nadu, your installer must be empanelled with TEDA. This ensures:

Use of BIS-certified components
Compliance with TNERC net metering regulations
Proper safety and installation standards
Eligibility for subsidy disbursement

Practical impact for Tamil Nadu homeowners: You do not need to apply separately to TEDA. When you apply through pmsuryaghar.gov.in and choose a TEDA-empanelled vendor, the state-level coordination happens automatically. Your primary interaction remains with the national portal and your installer.

4. PM-KUSUM Scheme (For Farmers and Agricultural Users)

The Pradhan Mantri Kisan Urja Suraksha evam Utthaan Mahabhiyaan (PM-KUSUM) is specifically designed for the agricultural sector. With a budget of Rs.2,600 crore for FY 2025-26, this scheme targets farmers and agricultural land owners.

Three Components of PM-KUSUM

Component	What It Covers	Subsidy/Support
Component A	Ground-mounted solar plants (up to 2 MW) on agricultural land	Farmers earn lease rent; power purchased by DISCOM at fixed tariff
Component B	Standalone solar agricultural pumps (up to 7.5 HP)	30% central subsidy + 30% state subsidy; farmer pays 40%
Component C	Solarisation of existing grid-connected agricultural pumps	30% central subsidy + 30% state subsidy; farmer pays 40%

Eligibility for Tamil Nadu Farmers

Requirement	Details
Applicant type	Individual farmers, farmer groups, cooperatives, panchayats, FPOs
Land requirement	Component A requires agricultural land ownership; Components B and C require existing agricultural connection
State participation	Tamil Nadu must have signed MoU with MNRE for the relevant component
Financial contribution	Farmer's 40% share can be financed through bank loan

Application Process for PM-KUSUM

Check availability at pmkusum.mnre.gov.in for Tamil Nadu-specific components
Apply through the state nodal agency (TEDA) or the national portal
Submit land documents and existing electricity connection details
Get technical feasibility assessment from TANGEDCO
Select empanelled vendor for installation
Commission system and submit documentation for subsidy release

Progress as of 2026: Over 10 lakh solar pumps have been installed or solarised under PM-KUSUM nationally, with Component B seeing a 4.2x increase in installations during FY25.

5. Accelerated Depreciation for Commercial and Industrial Installations

For businesses, the most significant financial incentive is not a direct subsidy but accelerated depreciation under the Income Tax Act. This benefit applies to all commercial, industrial, and institutional solar installations.

How It Works

Under Section 32 of the Income Tax Act, solar power generating systems qualify for 40% depreciation on a Written Down Value (WDV) basis in the first year. This is significantly higher than the standard depreciation rate for plant and machinery.

Financial Impact

Investment Amount	Year 1 Depreciation (40%)	Tax Savings (at 25% tax rate)	Tax Savings (at 30% tax rate)
Rs.10 lakh	Rs.4 lakh	Rs.1 lakh	Rs.1.2 lakh
Rs.25 lakh	Rs.10 lakh	Rs.2.5 lakh	Rs.3 lakh
Rs.50 lakh	Rs.20 lakh	Rs.5 lakh	Rs.6 lakh
Rs.1 crore	Rs.40 lakh	Rs.10 lakh	Rs.12 lakh

Over the life of the asset, the cumulative depreciation benefit substantially reduces the effective cost of the solar installation for any profit-making business.

Eligibility

Requirement	Details
Business type	Any business filing income tax returns (companies, LLPs, proprietorships, partnerships)
Installation type	Solar power generating system used for business purposes
Tax regime	Must be under the old tax regime to claim depreciation benefits fully
Documentation	Commissioning certificate, invoices, and proof of business use required

Who benefits most: Businesses with high taxable income see the greatest benefit. A Coimbatore textile mill investing Rs.50 lakh in rooftop solar can claim Rs.20 lakh in depreciation in Year 1 alone, effectively reducing the net investment to Rs.30 lakh before accounting for electricity savings.

For a detailed breakdown with worked examples, read our guide on accelerated depreciation for solar in Tamil Nadu industries. Also see solar tax benefits and depreciation explained for the complete tax planning picture.

MSMEs registered under Udyam can combine depreciation benefits with other MSME-specific advantages. Our guide on solar benefits with Udyam registration covers this in detail.

6. NABARD Solar Refinance Scheme

The National Bank for Agriculture and Rural Development (NABARD) operates a Special Refinance Scheme for rooftop solar installations in the residential sector, extended until September 2026.

Key Features

Feature	Details
Target area	Rural areas and towns with population under 50,000
System size	200 W to 10 kW
Loan channel	Through cooperative banks and Small Finance Banks (SFBs)
Interest rate	Concessional rates, as low as 6% through participating banks
Loan tenor	Minimum 18 months; repayment in quarterly instalments
Subsidy integration	Can be combined with PM Surya Ghar Yojana subsidy

How to Access NABARD Financing

Identify a participating bank in your area (district cooperative banks, regional rural banks, or Small Finance Banks)
Apply for the solar loan with standard KYC documents, property proof, and a quotation from an empanelled installer
The bank processes the loan at concessional refinance rates from NABARD
Install the system and simultaneously apply for PM Surya Ghar subsidy
Subsidy amount is adjusted against the loan, reducing your outstanding balance

This scheme is particularly relevant for homeowners in Tamil Nadu's smaller towns and rural areas who want to go solar but need financing support. For a broader look at financing options, see our guide on solar financing and loan options in India.

7. Additional Tax Benefits and Incentives

Beyond accelerated depreciation, several other tax and financial incentives exist for solar adopters.

GST Benefits

Solar panels and modules attract 12% GST (reduced from 18% in earlier years)
For residential installations under PM Surya Ghar, the subsidy calculation accounts for the post-GST price
Businesses can claim Input Tax Credit (ITC) on the GST paid for solar installations used for business purposes

Custom Duty Exemptions

Solar cells and modules manufactured domestically benefit from BCD (Basic Custom Duty) protection, which keeps domestic panel prices competitive
Approved List of Models and Manufacturers (ALMM) compliance is mandatory for subsidised installations

Net Metering Revenue

In Tamil Nadu, TNERC regulations allow net metering for rooftop solar systems up to the sanctioned load of the consumer. Excess power fed back to the TANGEDCO grid is adjusted against your consumption on a monthly basis. While not a subsidy, this effectively reduces your electricity bill to near zero for appropriately sized systems.

Which Subsidy Applies to You? A Decision Guide

Use this framework to identify which schemes and benefits you can access based on your profile.

Residential homeowner with TANGEDCO domestic connection:

PM Surya Ghar Yojana subsidy up to Rs.78,000 -- this is your primary benefit
NABARD concessional financing if you are in a town under 50,000 population
Net metering for bill reduction
Start here: PM Surya Ghar Yojana application guide

Housing society or apartment complex (Group Housing Society, GHS):

PM Surya Ghar Yojana subsidy, with each individual dwelling unit eligible for up to Rs.78,000
For common area installations, subsidy is calculated per dwelling unit
Net metering at the society level
Start here: Contact us for GHS-specific guidance

MSME or small business:

No direct capital subsidy (PM Surya Ghar is residential only)
40% accelerated depreciation under Section 32
GST Input Tax Credit
MSME-specific benefits with Udyam registration
Start here: MSME solar benefits guide

Large commercial or industrial unit:

40% accelerated depreciation (primary financial benefit)
GST Input Tax Credit
Net metering or group net metering under TNERC regulations
Power Purchase Agreements (PPA) as an alternative to self-ownership
Start here: Accelerated depreciation guide

Farmer with agricultural land or pump connection:

PM-KUSUM Component B for standalone solar pumps (60% subsidy)
PM-KUSUM Component C for solarising existing grid-connected pumps (60% subsidy)
PM-KUSUM Component A for ground-mounted plants on agricultural land (lease income)
Start here: Apply at pmkusum.mnre.gov.in or contact TEDA

Not sure which category you fall into? Use our Solar Savings Calculator to estimate your system size, costs, and applicable benefits, or get in touch with our team for a personalised assessment.

Summary: All Subsidies and Incentives at a Glance

Scheme	Target Beneficiary	Maximum Benefit	Administering Body
PM Surya Ghar Yojana	Residential homeowners	Rs.78,000 capital subsidy	MNRE via pmsuryaghar.gov.in
CM Solar Rooftop Incentive (TN)	Residential (small systems)	Rs.20,000 per kW (1 kW)	TEDA
PM-KUSUM Component B	Farmers (solar pumps)	60% of cost (30% central + 30% state)	MNRE + TEDA
PM-KUSUM Component C	Farmers (pump solarisation)	60% of cost (30% central + 30% state)	MNRE + TEDA
Accelerated Depreciation	Commercial/Industrial	40% depreciation in Year 1	Income Tax Department
NABARD Refinance	Rural residential	Concessional loan rates (~6%)	NABARD via cooperative banks
GST ITC	Commercial/Industrial	12% GST credit recovery	GST framework
Net Metering	All categories	Bill reduction to near zero	TANGEDCO under TNERC rules

Practical Considerations for Tamil Nadu

TANGEDCO Net Metering Timeline

Based on our experience handling installations across Tamil Nadu, here are realistic timelines:

Feasibility approval: 15-30 days after application
Net meter installation: 15-30 days after system commissioning
Subsidy disbursement: 30-45 days after net meter inspection and portal verification

Common Pitfalls to Avoid

Using non-DCR panels and losing subsidy eligibility entirely
Choosing a non-empanelled installer which disqualifies you from the PM Surya Ghar subsidy
Not linking Aadhaar to your bank account before applying, causing DBT failures
Undersizing the system and missing the Rs.78,000 sweet spot at 3 kW
Not filing for accelerated depreciation in the correct assessment year (commercial users)

For a comprehensive list of rejection reasons and fixes, see why solar subsidies get rejected and how to fix each issue.

FAQ

Can I claim both PM Surya Ghar subsidy and accelerated depreciation?

No. PM Surya Ghar Yojana is exclusively for residential (domestic) electricity connections. Accelerated depreciation under Section 32 of the Income Tax Act applies to commercial and industrial installations used for business purposes. These are mutually exclusive categories. A residential homeowner claims the subsidy; a business claims depreciation.

What is the total cost of a 3 kW solar system in Tamil Nadu after subsidy?

A 3 kW rooftop solar system in Tamil Nadu typically costs between Rs.1.8 lakh and Rs.2.2 lakh (including installation, panels, inverter, and mounting). After the Rs.78,000 PM Surya Ghar subsidy, your net investment comes to approximately Rs.1.0 lakh to Rs.1.4 lakh. Use our Solar Savings Calculator for an estimate tailored to your specific requirements.

Is the PM Surya Ghar subsidy available for commercial or industrial buildings?

No. The PM Surya Ghar Muft Bijli Yojana subsidy is strictly for residential consumers with domestic electricity connections. Commercial, industrial, and institutional consumers are not eligible for this capital subsidy. However, businesses benefit significantly from accelerated depreciation (40% in Year 1), GST Input Tax Credit, and electricity cost savings. See our accelerated depreciation guide for the commercial benefits breakdown.

Can farmers in Tamil Nadu combine PM-KUSUM with PM Surya Ghar?

These are separate schemes for different purposes. PM-KUSUM covers solar pumps and agricultural applications on your agricultural connection. PM Surya Ghar covers your residential rooftop on your domestic connection. If a farmer has both a domestic home connection and a separate agricultural pump connection, they can technically benefit from both schemes -- one for the home and one for the farm -- since the applications are on different consumer numbers.

How long does the entire subsidy process take in Tamil Nadu?

From application to subsidy credit in your bank account, expect 60 to 90 days in most cases. This includes registration (1 day), feasibility approval from TANGEDCO (15-30 days), installation and commissioning (3-7 days), net meter installation (15-30 days), and subsidy processing after verification (30-45 days). Delays most commonly occur at the TANGEDCO feasibility approval stage and the subsidy disbursement stage. Working with an experienced, empanelled installer significantly reduces the risk of delays from documentation errors.

Are solar subsidies in India likely to continue beyond 2026?

The PM Surya Ghar Yojana has a total budget of Rs.75,021 crore and a target of 1 crore rooftop solar homes by 2027. As of March 2026, approximately 26 lakh installations have been completed, which means the scheme is well-funded and far from its target. PM-KUSUM has been extended through March 2026 with potential for further extension. The NABARD refinance scheme runs until September 2026. While future policy changes cannot be guaranteed, the current trajectory strongly favours continued government support for rooftop solar. That said, subsidy rates could be revised downward as solar costs continue to fall, so acting sooner is generally advisable.