Consider the common awning. It provides shade. Shade cools houses. Houses with awnings need less air conditioning. Therefore, awnings should qualify for the home insulation tax credit Congress voted last year to conserve oil, right?

Wrong, the Treasury Department firmly told the imaginative taxpayer who wrote in recently to ask about awnings. And wrong, wrong, wrong, it has had to tell hundreds of other inquiring homeowners since the bill was passed.

No, window shades don't quality. Nor do fireplaces, or even wood-burning stoves, though neither burns oil.

Then there's the lady from Paducah, Ky., who would like a tax break on the price of an entire house. It's an "earth home," she explained, built underground in the interest of saving energy. Sorry, said the government, earth homes aren't on the list of qualifiers.

"Just about anything you might think of, we've had some inquiry on," says a Treasury tax policy expert.

You really can't blame people for trying. The tax credits were adopted as part of the Energy Act of 1978 to promote conservation consciousness around the house. National energy consumption numbers tell why. Currently, a fourth of domestic consumption is used for residential purposes, and surveys show that many U.S. residences are not adequately insulated.

But exactly what counts as worthy of a credit was left ambiguous by Congress and left open to interpretation by Treasury reviewers. This assumes, of course, that tax officials understand all the devices they're asked to judge. Take, for example, something called a "windowblanket," made by the Window Blanket Co. of Lenoir City, Tenn.

"I think it's basically a large piece of thick cloth that can be drawn over a window to block the cold," says one Treasury official, conceding abashedly, "It's hard to tell precisely what some of these things look like."

The debate over what should quality for a credit can itself generate lots of energy in government halls.

Rep. Philip Crane (R-Ill.), for instance, recently wrote the Treasury on behalf of a constituent to urge that window shades be allowed a credit. He quoted a study by the Illinois Institute of Technology on the effectiveness of window shades as energy-conserving devices.

"The results," Crane said, "indicated that as much as 8 cents per dollar spent on heating and 21 cents per dollar spent on cooling are saved by the use of window shades in a residence in a moderate climate. Window shades were proven to block out up to 54 percent of the sun's rays and hot air that normally get into a home through windows in the summer, and kept inside up to 31 percent of the indoor heat that normally escapes through windows in the winter."

The problem with window shades, say Treasury officials, is that people buy them as a matter of course. "People shouldn't be reimbursed for what they'd do anyway," remarks one government tax reviewer.

For that matter, the idea of providing any kind of credit for things done at home to save oil and gas has been criticized as a giveaway. Those who oppose such credits say the savings that result from added insulation, weather stripping or storm windows should be their own reward. But Congress and the White House thought a little extra encouragement was needed.

Still trying to define the sorts of energy saving measures the final bill had in mind, the Treasury Department has issued a set of proposed regulations. They cover two broad categories:

1. Insulation. The basic rule here is, if it keeps the cold out or the heat in more efficiently, it qualifies for a credit. The catch is, the item's primary purpose must be insulation. It can't be for show. Therefore, awnings, drapes, carpets, wood paneling, fireplace screens and exterior siding don't count. While admittedly such things have an insulating effect, Treasury considers them chiefly structural or decorative items.

2. Renewable energy sources. This includes equipment that runs on solar or wind energy. It does not include fireplaces or woodburning stoves, since wood is not considered a sufficiently renewable energy source. Also excluded are so-called "passive solar systems," such as skylights, greenhouses, extra thick walls, roof overhangs or windows that face south to catch more sunlight.

Note, too, that tax credits apply only to changes in existing homes, not to energy-efficient new ones. Here it was agreed that no extra encouragement would be necessary. Economic considerations alone are expected to induce builders to insulate new homes properly.

There are those who argue that the government's rules are too restrictive, that tax credits for home energy conservation are a good idea that should be more widely applied if they are to have significant effect.

That would cost too much, says the Treasury. Can you imagine crediting all the awnings and window shades bought in America each year? As is, the tax breaks are expected to mean a loss in federal tax revenues of $555 million a year by 1983.

President Carter's latest energy proposal, however, would extend credits to woodburning stoves and some passive solar systems. This is conditional on passage of the windfall profits tax, part of which would cover the cost of granting more tax credits.

Under the current law, homeowners can claim a credit of 15 percent of the first $2,000, or a maximum of $300, spent on insulation components. For renewable energy sources, homeowners can claim a credit of up to 30 percent of the first $2,000 spent, and 20 percent of the next $8,000, for a maximum of $1,000. The credit applies to expenditures made on or after April 20, 1977, and before Jan. 1, 1986.

So when you start considering ways to cut that utility bill, be sure before you pull down the shades and put out the awning that you're conserving according to the government's definition of the word.