The Central Board of Indirect Taxes and Customs (CBITC) has clarified after a six-month wait, regarding customs duties, for solar panels imports, in the solar sector.
The CBITC has now clarified there will be no customs duty on the bulk of imported solar panels and modules. The controversy regarding the same has been into the sector for more than six months.
This has come as a relief to many solar developers as about more than 80 percent of the solar project in India use imported panels.
Earlier than September 2016, the solar equipment was grouped with diodes, photosensitive semiconductors, and other semiconductor devices. (HS Code 8541). Their import was free.
In September 2016, an order was passed from CBITC classified the solar panel and modules along with electric motors and generators, under Customs Act (HS Code 8501). The reason cited for the inclusion was the generation of power by the modules. The import duty on the electrical equipment was 7.5 percent excluding other cess and taxes, which when included come to 10 percent. This was implemented in the middle of 2017.
The official order has finally distinguished between the two and put the solar equipment under the heading 8541.The most solar panels that are being imported by India use bypass diode and hence will be duty-free.
This solar import duty had become an issue on the Chennai port where a lot of panels were held back, which later happened across other ports as developers were contesting the duty charged.
MNRE minister R. K. Singh and MNRE secretary Anand Kumar took up the matter with their finance ministry counterparts after the customs official refused to budge and analyzed the matter in light of achieving the solar target and looking at the falling solar tariff. They realized that the import duty will raise the cost of many solar projects which might make them unviable and this will become a hindrance to the ambitious target of achieving 100,000 MW of solar capacity by 2022.
Source: devdiscourse.com