The Indian Biogas Association (IBA) has welcomed the government’s decision to reduce Goods and Services Tax (GST) on biogas plants and devices from 12% to 5%, effective September 22. The association said the move would make biogas technology cheaper, attract more private investment, and create new opportunities in the sector, reports CNBC TV 18.
The GST Council, which includes the Centre and states, announced the tax cut last week as part of a wider reform. It reduced GST slabs from four to two — 5% for most common-use goods and 18% for others — removing the earlier 12% and 28% rates. The change marks the biggest overhaul of the tax system since GST was introduced in July 2017.
According to the IBA, lowering the tax rate by 7% will improve the financial viability of compressed biogas (CBG) projects, potentially leading to a 4–5% rise in fresh investments in the short to medium term. Over time, the effect across the industry could be much larger. The sector expects private investment worth $4–5 billion following the change.
IBA president A.R. Shukla said the reform would not only make biogas more affordable but also create jobs in manufacturing, installation, and maintenance. He stressed that further work is needed to reduce higher taxes on components used in biogas equipment, which currently raise overall project costs. Correcting this imbalance, he said, would encourage wider adoption of biogas projects.
The association noted that lower GST will reduce installation costs and help expand renewable energy access in rural areas, alongside other green technologies such as solar lanterns, windmills, and waste-to-energy systems.
The IBA is the country’s first and largest professional body representing stakeholders in the biogas sector, including technology providers, project developers, plant operators, and researchers.
