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GST Cut On Biogas Plants To Spur Investment, Says Industry Body
Effective from 22 September, the GST on biogas plants and devices has been cut from 12 per cent to 5 per cent following a major restructuring of the tax regime. The GST Council, comprising the Centre and states, last week agreed to reduce tax rates on 375 items and simplify slabs from four to just two. From the effective date, most common-use goods will attract 5 per cent GST, while the rest will be taxed at 18 per cent.
According to IBA, the tax cut will make biogas plants more affordable and financially attractive, directly improving project viability. The sector is expected to see a 4–5 per cent rise in new investments in the short to medium term, with the multiplier effect across the value chain likely to be even higher.
By 2030, the Indian compressed biogas (CBG) industry could draw USD 4–5 billion in private investment, the association said.
IBA president A R Shukla welcomed the reform, saying it would not only make biogas more accessible but also create jobs in manufacturing, installation and maintenance. However, he stressed the need to correct the inverted tax structure, where inputs for biogas equipment attract higher GST than the finished plant, inflating project costs.
The move is expected to accelerate the adoption of decentralised renewable energy in rural areas, complementing other green technologies such as solar, wind and waste-to-energy systems, while reducing installation expenses and supporting India’s energy transition goals.
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