15/10/2026
đ Comprehensive VAT, Customs & Income Tax Guideline for Solar Equipment Manufacturers and Solar Electricity Producers in Bangladesh
FY 2026â27 | Bangladesh VAT & TAX Digest
Bangladeshâs solar sector now has a distinct tax profile. A solar equipment manufacturer and a solar electricity producer are not treated the same for VAT, Customs and Income Tax purposes. Product classification, project structure, PPA, net-metering, import concessions, exemption conditions and compliance records all matter.
For solar equipment manufacturers, photovoltaic cells and modules/panels may enjoy VAT exemption under the applicable SRO framework, while lithium and graphene battery manufacturers may qualify for separate conditional incentives. However, solar inverters, mounting structures, BMS, SCADA systems and DC cables must be checked product-by-product against the relevant H.S. Code, tariff and SRO before claiming any exemption.
For solar electricity producers, electricity is classified under Heading 27.16, H.S. Code 2716.00.00. Under SRO No. 127-Ain/2026/332-Mushak, electricity is included in the production-stage exemption table. Therefore, solar electricity generated for captive use, net-metering export or supply by an IPP/RESCO may enjoy production-stage VAT exemption, subject to the exact legal and contractual structure.
However, when the same electricity is subsequently supplied by BPDB, DESCO, DPDC or another electricity distributor/supplier to the final consumer, the supply is treated separately under Service Code S057.00, where the applicable VAT treatment must be considered. Specific exemption may apply for certain uses such as irrigation and cold-storage services.
On the Customs side, SRO No. 159-Ain/2026/14/Customs, as amended by SRO No. 241-Ain/2026/71/Customs, provides major concessions for qualifying solar projects. Eligible items include solar inverters, photovoltaic modules/panels, lithium batteries, BESS, mounting structures, BMS, SCADA/control systems, solar DC cables and battery thermal-management systems. The benefit is subject to strict conditions relating to VAT compliance, SREDA documentation, PPA/EPC agreements, IEC certification, installation and commissioning, and non-diversion of imported equipment.
On the Income Tax side, SRO No. 211-Ain/Income Tax-2/2026 provides significant incentives for qualifying solar electricity businesses, including income-tax exemption on eligible solar-generation and supply income up to 30 June 2035, subject to prescribed conditions. The user of qualifying solar electricity may also be entitled to a tax rebate equal to 5% of the electricity bill paid.
â ī¸ Important: Tax exemption does not mean exemption from compliance. Solar businesses should maintain proper BIN/TIN, IRC/BIDA/SREDA approvals, PPA or electricity sale agreements, EPC agreements, Bills of Entry, H.S. classification records, Mushak-4.3 where applicable, Mushak-9.1 returns, meter and generation records, TDS/VDS documents, IEC certificates and evidence that concessionary imported equipment has not been diverted or used for another purpose.
For a solar project, the safest approach is to map the transaction separately as:
Equipment Manufacturing â Project Import â Electricity Generation â Captive Use/Net Metering/PPA Supply â Distribution to Final Consumer â Income Tax Treatment.
Bangladesh VAT & Tax Digest
Your Trusted Partner in VAT & Tax Compliances
Md. Daud Faraizy
Licensed VAT & Tax Consultant | CEO
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