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Urgent! Is Solar Energy liable to excise duty ?

Gaurav (Finance) (57 Points)

27 November 2008

Dear All, Please provide conclusive information whether solar energy is liable to excise duty ? Regards Gaurav

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CA. Dashrath Maheshwari (TaXpert) (15103 Points)
Replied 27 November 2008

Solar Cells - free of Ex.Duty

Solar lantern or lamp 10.0% Duty

For More info go through the below article:

Solar energy is an alternative source of energy which is renewable and eco-friendly. Solar technologies are being used in our day to day lives in the form of solar water heaters and solar cookers. But the questions remains that are we utilising it to the fullest. The answer would be a plain “No”. India still heavily depends on coal for power. This dependency has been slightly reduced by hydel-power, but hydel power like coal has its limitations. The construction of dams to store the water, as a result of which a lot of fertile land (near the water source) is submerged, this is a major limitation and we all know that coal deposits are limited and coal is anything but eco-friendly.

In a growing country like India the need for power will only increase. The power generated falls short of the power required by around 15% in the present scenario and power goes hand in hand with development. The geographic location of India is such, that an abundant amount of sunlight is available to us in most areas. This sunlight can be used to create solar power through a device called photo voltaic cells (solar cells) which has been used in our calculators for quite some time. Solar cells are devices which convert light energy to electrical energy. A large scale use of this form of energy has been discussed and implemented in India recently to generate 10,000 MW of power by 2012 through non-conventional sources. A country-wide Solar Photovoltaic Programme is being implemented by the government, aimed at developing cost effective PV technology and its applications for large-scale sectors, especially in rural and remote areas. Major components of this program include: solar street lighting systems, solar lanterns, home lighting systems/solar home systems, stand-alone power plants, solar water pumping systems for agriculture and related uses. 2012 is the key year because government intends to provide electricity in remote villages by that year. The photo voltaic technology needs large area for construction, as the power generated is proportional to the surface area of the photo voltaic cells exposed to sunlight. But in places like Rajasthan with barren lands in abundance, this technology is heaven-sent. Its not that Indian Government has suddenly woken up to solar power, it has been aware of it since the 70’s but while other parts of the world have gone on to develop this form of power Indians have fallen behind.

Despite the advantages one must consider that manufacture of monocrystalline silicon, which is the raw material for a photo voltaic cell is expensive and is not easily available. More than half of the total solar grade silicon is imported. This can be a hindrance in the growth of solar energy in our country but the government is taking measures to counter that by providing Photo voltaic manufacturers and users with 100% depreciation in the 1st year of installation of the systems, no excise duty for manufacturers, low import tariff on imported parts, and soft loans to users, intermediaries and manufacturers.

Recent developments have shown that by slicing a single silicon wafer a larger surface area can be provided, thereby reducing the cost and doubling the surface area. These kinds of breakthroughs are bound to encourage the use of solar energy, rather than emitting suspended matter in the atmosphere by using the conventional sources of energy. The time has come for conventional sources of power to take a back-seat with solar energy powering cars, houses, industries, agriculture, etc. and remember; as long as there’s sunlight there will be solar power.

**DM