NBR eases process for solar panel, equipment import

The National Board of Revenue (NBR) has clarified the complexities surrounding duty and tax benefits for solar inverters, correcting the HS Code mentioned for the product and specifying the procedure for availing duty and tax concessions on imports of solar panels and related equipment.

Under the new directive, the description of the product will take precedence over the HS Code in the case of solar inverters. It also states that manufacturing entities importing equipment required for setting up solar power plants will be allowed to clear the imported goods by paying only 1% customs duty.

Although the budget for fiscal year 2026-27 provides duty and tax exemptions on the import of goods required for solar power generation, complexities had arisen in implementing the provisions at various customs houses and LC stations across the country.

Against this backdrop, the NBR clarified the issues through a circular issued on Monday.

The NBR said that in Table-3 of the SRO related to the production and supply of renewable solar power, HS Code 8504.40.90 had inadvertently been mentioned against solar inverters. The correct HS Code should have been 8504.40.40.

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However, importers will not be deprived of the applicable duty and tax concessions because of this coding error. The NBR said that in such cases, the product description will take precedence over the HS Code.

As a result, the duty and tax concession specified in the SRO will remain applicable to imports of solar inverters.

The circular further states that if a manufacturing entity intends to set up a solar power plant for its own electricity generation, it may import all the equipment and materials required for establishing the plant, subject to fulfilling the prescribed conditions. In such cases, the entity will be allowed to clear the imported goods by paying only 1% customs duty.

For commercial importers, on the other hand, the applicable charges will include 1% customs duty, 7.5% Advance Tax (AT), and 5% Advance Income Tax (AIT). The AT and AIT will be adjustable subsequently in accordance with the applicable tax provisions.

The NBR said the circular was issued under the powers conferred by Section 266 of the Customs Act, 2023. The directive has been sent to the relevant customs houses, LC stations and commissionerates for implementation.