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Calculate ROICapital Allowance for Solar Panels Malaysia 2026: How CA and GITA Treatment Works
Malaysian companies may have separate capital-allowance and GITA questions when installing solar. Eligibility, qualifying expenditure, statutory-income limits, timing and the applicable tax rate determine the outcome. This guide separates those concepts and flags where LHDN, MGTC and a tax adviser must confirm the claim.
Key Takeaways
- Solar PV is classified as "Plant & Machinery" under Schedule 3 Income Tax Act 1967 — generally eligible for Capital Allowance (CA) for companies with business income; confirm with your tax adviser.
- CA Schedule: 20% Initial Allowance (Year 1) + 14% Annual Allowance = full cost recovered over ~6 years.
- GITA is an allowance on qualifying expenditure, not a direct cash rebate. Its utilisation depends on the applicable scheme, statutory income, timing and current MGTC rules.
- Any worked tax example is illustrative only: the result depends on qualifying expenditure, taxable/statutory income, utilisation limits, tax rate and timing.
- Eligibility depends on your business structure and tax position — confirm with your tax adviser or LHDN. Individual homeowners use Solar ATAP bill credits and green bank loans (EPF Account 2 withdrawals are not approved for solar panels). Note: SolaRIS RM4,000 ended April 2025.
- GITA timing: confirm the current MGTC application and expenditure deadlines before committing to installation.
What Is Capital Allowance (CA) for Solar?
Under Schedule 3 of the Income Tax Act 1967, solar photovoltaic (PV) systems are classified as "Plant & Machinery" — a qualifying category of fixed assets that companies can depreciate for tax purposes through Capital Allowance (CA). Unlike accounting depreciation (which follows accounting standards), CA follows specific rates set by LHDN regardless of actual useful life.
Important: CA is not a grant. It reduces your taxable income — so the actual cash saving depends on your corporate tax rate (17% for SMEs earning under RM600K, or 24% for larger companies).
What Is GITA (Green Investment Tax Allowance)?
GITA is a separate incentive for qualifying green technology investments. The applicable asset category, certification, applicant, timing and statutory-income rules must be checked against current MGTC guidance before any percentage is treated as a cash benefit.
GITA for Assets
For companies purchasing qualifying green assets for own consumption (e.g., solar panels on your own factory). Applied to the purchasing company. This is the most common path for B2B solar.
GITA for Projects
For companies providing qualifying green technology services or products to third parties. Applicable to solar developers or ESCOs selling green tech solutions.
GITA is administered by MGTC (Malaysian Green Technology & Climate Change Corporation). Equipment must carry MyHIJAU Mark to qualify. Confirm that the specific models are listed on MyHIJAU before you buy.
Tax Savings Calculator
Enter your system cost and corporate tax rate to see the tax value of capital allowance and of GITA, and your payback period with GITA.
* Energy savings assume RM2,400/kWp, 3.5 peak sun hours/day, all output used on site and the Non-Domestic Low Voltage rate of RM0.5068/kWh (MV General sites save less: RM0.2983/kWh energy). GITA is subject to MGTC verification and is set off against up to 70% of statutory income each year. Whether capital allowance and GITA can both be claimed on the same asset must be confirmed with your tax agent.
Year-by-Year Capital Allowance Claim Schedule
Based on a RM200,000 solar system. Year 1 combines Initial Allowance (20%) and Annual Allowance (14%) = 34% total. Subsequent years claim 14% annually until full cost is written off.
| Year | Initial Allowance | Annual Allowance | Total CA | Tax Saved (24%) |
|---|---|---|---|---|
| Year 1(IA + AA) | RM 40,000 | RM 28,000 | RM 68,000 | RM 16,320 |
| Year 2 | — | RM 28,000 | RM 28,000 | RM 6,720 |
| Year 3 | — | RM 28,000 | RM 28,000 | RM 6,720 |
| Year 4 | — | RM 28,000 | RM 28,000 | RM 6,720 |
| Year 5 | — | RM 28,000 | RM 28,000 | RM 6,720 |
| Year 6 | — | RM 20,000 | RM 20,000 | RM 4,800 |
| Total | RM 40,000 | RM 160,000 | RM 200,000 | RM 48,000 |
CA claim per year (RM200,000 base)
Who Qualifies for Capital Allowance on Solar?
Who Qualifies
- Business structure and tax position confirmed with your tax adviser or LHDN
- Solar system for own consumption (not for resale)
- System installed on company-owned or long-term leased premises
- MyHIJAU certified equipment (for GITA)
- Current MGTC application and timing confirmed (for GITA)
- Current expenditure/commissioning rule confirmed (for GITA)
Who Does NOT Qualify
- Individual homeowners (use Solar ATAP and SuRIA Home instead)
- Companies that lease/PPA the solar (lessor claims CA, not lessee)
- Non-MyHIJAU certified equipment (for GITA)
- Solar installed for resale of electricity (IPP scheme instead)
- Projects outside the current GITA timing rule (confirm with MGTC)
Required Documentation
How It Gets Filed
CA is claimed annually in your company's income tax return (Form C) filed with LHDN. Your tax agent will include a Capital Allowance Schedule listing the solar asset, purchase date, cost, IA/AA rates, and cumulative CA to date. No separate LHDN application is required — it is simply included in your annual filing.
CA + GITA vs SuRIA Home: Business vs Residential
Two completely separate incentive schemes exist for solar in Malaysia — one for businesses, one for homeowners. They cannot be cross-applied.
| Factor | CA + GITA | SuRIA Home |
|---|---|---|
| Who It's For | Businesses (confirm eligibility with your tax adviser) | Individual homeowners (Malaysian citizens) |
| How Applied | Tax deduction on Form C | Cash rebate paid to the TNB account holder |
| Maximum Benefit | Depends on eligibility and utilisation | RM600/kWac, capped at RM3,000 |
| System Size | Non-domestic Solar ATAP capped at 100% of MD, up to 1,000 kWac | Residential Solar ATAP (5 kWac single / 15 kWac three phase) |
| Processing Body | LHDN (CA) + MGTC (GITA route) | TNB |
| Application Timing | CA: annual filing. GITA: after commissioning, by 31 Dec 2026 | No application: TNB notifies you |
| Timing | Confirm current GITA rule; CA follows applicable filing rules | Check current programme |
| Documentation | Invoice, asset and current scheme evidence | None from the homeowner |
How to Claim — Step by Step
Capital allowance and GITA have separate eligibility and timing rules. GITA is applied for after commissioning; confirm your claims with your tax adviser.
Engage a SEDA-Registered Installer
Week 1–2Obtain quotes from SEDA-registered PV Service Providers (RPVSP). Keep itemised equipment, model, specification and certification evidence; confirm the current MGTC application format before filing.
Plan Commissioning Before 31 Dec 2026
Week 1–2GITA Asset applications go to MGTC after the system is commissioned and must be submitted by 31 December 2026. Plan the project so installation and TNB commissioning finish in time; the whole process typically takes 6–10 weeks including approvals.
Install & Commission
Week 2–10Trexon installs the system (on-site time depends on system size) and handles the Solar ATAP application. Keep the commissioning report, invoices and equipment specifications for your GITA application and tax records.
Submit the GITA Application to MGTC
After commissioningAfter commissioning, submit the GITA Asset application to MGTC with invoices and commissioning evidence. It must be submitted by 31 December 2026. Subject to MGTC verification.
Add Solar to Fixed Asset Register
After commissioningRecord the solar system as a fixed asset (Plant & Machinery) in your company's Fixed Asset Register. Include: purchase date, invoice number, cost, IA rate (20%), AA rate (14%), and estimated useful life. Your accountant handles this.
Claim CA + GITA Annually in Form C
Every year until fully claimedEach year, your tax agent includes the Capital Allowance Schedule in your company's Form C filing with LHDN. Year 1: IA 20% + AA 14% = 34%. Years 2–5: 14% per year. GITA: 60% allowance set off against up to 70% of statutory income each year; any unused balance is carried forward until fully used.
Illustrative Scenario — Not a Trexon Project: 100 kWp Factory Rooftop
Modeled scenario only: a 100kWp rooftop system at a hypothetical manufacturer. System cost, tax rate and utilisation must be replaced with the company's documented facts.
Illustrative scenario, not a Trexon project. Actual tax savings depend on company-specific statutory income and applicable tax rate; confirm capital allowance and GITA treatment with your tax agent.
Frequently Asked Questions
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Trexon's commercial team can prepare an illustrative evidence pack; your tax adviser and MGTC/LHDN must confirm the claim, amount and current application route.
