Customs Duty And GST - Classification Of Solar Power Projects

The Central Goods & Services Tax Act, 2017 ('CGST Act') and related legislations received the assent of the President on 12.04.2017 and came into force on 01.07.2017, by way of Notifications No. 9/2017, 12/2017 & 13/2017 ('GST Law'). The GST Law subsumes multiple taxes and duties which were levied by the Central and State Governments on goods and services. Pursuant to the introduction of GST Law, solar power projects are now subject to the GST which ranges from 2.5% to 28% tax bracket as per the GST rate schedule for goods issued on 18.05.2017 and as amended from time to time.

In addition to the imposition of GST, the import of solar modules also witnessed a shift in the interpretation by the Customs Department. As per the existing law (i.e. Notification no. 01/2011 dated 06.06.2011), customs duty on import of solar modules is waived off as it is classified under Customs Tariff Heads ('CTH') 8541 4011 which reads as 'Diodes, transistors and similar semi-conduction