The concept to promote renewable energy for power conservation through tax relief is going to be bleak as the Federal Board of Revenue (FBR) appears dissuasive to grant sales tax exemption on the import of different renewable energy products; it was learnt.
According to market sources, the government through Finance Act 2016 had extended the exemptions from the levy of customs duty to 16 items used for promotion of renewable energy technologies or for conservation of energy under serial number 22, part-1 of the fifth schedule to the Customs Act 1969. They said that these items were SMD, LED, LVD lights with or without ballast, fittings and fixtures, street lights, PV module, etc.
However, the scope of exemption is restricted to six items used for the promotion of renewable energy technologies including SMD, LED with or without ballast, fittings and fixtures under serial number 15 of table-3 of sixth schedule to the Sales Tax Act 1990.
Sources further said that trade representatives had approached the FBR several times and informed the board that although the benefit of zero per cent customs duty was available, exemption from sales tax was not being allowed by the customs authorities at import stage.
They said that government was aimed at promoting the concept of renewable energy through tax relief for power conservation but it was not serving the purpose as the customs department was collecting sales tax at import stage, which was reflecting in the retail prices of different renewable energy products.
Moreover, they said that the majority of people instead of switching to renewable energy technologies was tilting towards other products as these products were still cheaper than renewable energy technologies. "On one hand, the government desperately needs energy conservation through renewable energy products. On the other hand, the customs department is not keen to allow complete tax relief with the aim to avoid negative impact on its tax collection," sources maintained.
Replying to a question, sources said that authorities concerned should look into the matter and take appropriate measures to make the said concept successful and if not, it would remain unable to yield fruits.
Meanwhile, official sources said that exemption from customs duties was available to the items under serial number 22 of the fifth schedule to the Customs Act 1969 whereas preamble to serial number 15 of table-3 of the sixth schedule to the Sales Tax Act 1990 restricted exemption provided for the promotion of renewable energy only and not to items for power conservation.
Therefore, the authorities in order to resolve the issue of exemption of sales tax at import stage and to provide relief the importers have allowed the clearance of aforesaid consignments against bank security under section 81 of the Customs Act 1969 irrespective whether the items are for promotion of renewable energy or for power conservation.