ISLAMABAD: Federal Board of Revenue (FBR) has asked customs collectorate to collect duty and taxes on import of specific parts of solar panels.

Provisions have been incorporated in the Finance Act, that customs duty and sales tax would be charged at statutory rate on the import of items that were identifiable as being manufactured locally.

The rest of machinery and equipment for power generation through renewable sources of energy have been declared duty and sales tax free.

In a statement, FBR spokesperson Shahid Husain Asad said that on the demand of indigenous engineering industry who are making some specific parts of solar panels, exemption has been withdrawn in the budget 2014-15 on those items/parts manufactured by them.

Under the previous SRO 575(I)/2006, the condition of locally manufactured goods was not applicable on import of solar panels and allied equipment. However, this condition was now applicable in terms of Fifth Schedule of Customs Act, 1969 and Sixth Schedule of Sales Tax Act, 1990.

The FBR clarification came at a time when few importers were facing problems in case of the exemption from payment of duties/taxes on import of solar panel since the item was being manufactured locally.

The FBR said the importers furnished literature and information to the effect that the parts made by local manufacturers are of different specifications and capacities.

And all the impugned consignments have been directed by the Federal Board of Revenue to be released against the written undertaking by importers that they would also bring necessary clarification from Engineering Development Board that the instant imported solar panels are not manufactured locally, thereby establishing legitimacy of the claimed exemption.

Published in Dawn, July 29th, 2014