Three major factors lead to the deviation of actual power output of a photovoltaic (PV) panel from the rated value: irradiance, temperature and spectral factor. While the first two are well characterized, spectral factor remains less explored. Spectral factor depends on the spectral irradiance as well as the spectral response of the material. So far, normal irradiance is assumed for the estimation of the spectral factor which excludes one major factor, i.e. the angle of incidence (AOI). Here it is demonstrated that AOI has a strong effect on spectral factor due to multiple reasons. For a chosen PV material of monocrystalline Si, the AOI-dependence is obtained through the following parameters: reflectivity of a bare cell and a covered panel, the transmissivities of the cover system and the effective AOI on the PV cell after multiple refractions. When all these factors are incorporated in the estimation of spectral factor, a systematic underestimation (∼4.5%) is observed for the conventional method. Further the modified definition is tested for a chosen location of Kanpur, India for annual variations. Again a significant underestimation is noticed (∼3.5%), the value of which is expected to be higher for higher latitude locations due to greater obliquity of insolation. The effect of angle of incidence on the absorption and conversion is studied for a monocrystalline silicon solar photovoltaic panel. The spectral factor is demonstrated to be sensitive to the angle of incidence which alters the reflectivity, transmissivity of the cover system and the effective angle of incidence on the layer of photovoltaic material. Display omitted •AOI-dependence on spectral factor (SF) is estimated for m-Si PV module.•AOI-dependent spectral reflectivity is measured for bare PV cell.•AOI-dependent spectral transmissivity of cover material is measured.•Strong AOI dependence on SF-estimation is observed.•Seasonal variations of SF are illustrated for Kanpur, India.