Government to Offer Tax Incentives for Solar Power Generation
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The government is set to provide tax benefits for industrial and commercial entities generating their own solar power, aiming to expand the use of renewable energy in the country. Under the new provision, income tax exemptions and tax rebate facilities will be available for solar power generation and usage, subject to the fulfilment of specific conditions.
Officials of the National Board of Revenue (NBR) said that institutions engaged in generating and supplying renewable electricity through solar power plants will receive income tax exemptions on earnings generated from July 30, 2025. The facility will come into effect from July 1, 2026, and a formal gazette notification will be issued soon.
NBR officials said that to qualify for the tax benefit, an institution must establish and operate a solar power plant under its own financing and management. It must also obtain approval from the relevant distribution company under the Net Metering Guideline 2024. In addition, electricity must be supplied under a Power Purchase Agreement (PPA) signed with users. However, surplus electricity may be supplied to the national grid, and withholding tax deduction and deposit into the government treasury will remain applicable where required.
Officials further said that if an institution generates solar power for its own consumption, it will receive a tax rebate equivalent to 5 percent of the paid electricity bill against its total income tax liability. The initiative is expected to play a significant role in reducing high energy costs and import dependency.
Mustafa Al Mahmood, president of the Bangladesh Sustainable and Renewable Energy Association (BSREA), told Agamir Somoy that there has long been a demand for tax incentives to increase the use of solar energy in the industrial sector. He said the new initiative sends a positive signal to investors, adding that many industrial units are already showing interest in rooftop solar installations. He noted that effective implementation of the tax benefits would not only reduce electricity costs but also lower carbon emissions.
The government has set a target of generating 10,000 megawatts of solar power by 2030. According to the Bangladesh Power Development Board (BPDB), 26 renewable energy plants with a combined capacity of 1,174 megawatts are currently under construction in the country, most of which are being implemented in the private sector.
Shafiqul Alam, lead energy analyst at the Institute for Energy Economics and Financial Analysis (IEEFA), said that industrial electricity demand in Bangladesh is rising rapidly. In this context, offering tax incentives for alternative energy is a timely decision. However, he stressed that tax exemptions alone will not be sufficient and that net metering approval and grid connection processes must be simplified. He also called for increased bank financing and technical support so that small and medium enterprises can also benefit from the facility.
Bangladesh Power Development Board (BPDB) Chairman Engineer Rezaul Karim said that the initiative is part of the government’s integrated plan to reduce carbon emissions and strengthen energy security.
