Imported solar power equipment will not attract customs duty

Imported solar power equipment will not attract customs duty

Much to the relief of solar developers, the Central Board of Indirect Taxes and Customs (CBITC), has clarified that the bulk of imported solar panels and modules will not attract customs duty, putting to rest a controversy that had been raging for more than six months. Around 90 per cent of panels used in Indian solar projects are imported.

In September 2016, the CBITC had passed an order saying that since solar panels and modules generate power, they should be classified along with “electrical motors and generators” under the Customs Act (HS Code 8501) which attract 7.5 per cent import duty, apart from various kinds of cess, amounting to a total of around 10 per cent. Its implementation, however, began only in the middle of 2017. Until then solar equipment had always been grouped with “diodes, transistors and similar semiconductor devices, photosensitive semiconductor devices,” etc, (HS Code 8541) whose import was free.

In an official order, the CBITC has now clarified that “solar panels or modules equipped with bypass diodes are classifiable in heading 8541” while “solar panels or modules equipped with blocking diodes” as well as those with “blocking diodes and bypass diodes” are “classifiable in heading 8501.” Solar developers ET spoke to all maintained that most of the solar equipment India imports are those with bypass diodes only, and will thus not attract duty. Read More

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