The reduction of the tax of goods and services (GST) on biogas factories and devices will stimulate private investments in the sector, said the Indian Biogas Association on Sunday.
The GST on biogas plants and devices has been reduced to 5 percent of 12 percent, with effect from 22 September.
The GST council, consisting of the center and states, decided last week to lower the tax rates on 375 items and to reduce the number of plates to only 2 of 4 currently.
From 22 September a GST of 5 percent will be levied for the most common goods and 18 percent on everything else. The GST Council made a unanimous decision to abolish the 12 and 28 percent records, the largest Rejig in 8 years since goods and service tax (GST) was rolled out on July 1, 2017.
Biogas plants and devices must become cheaper and more accessible and financially more attractive for investments, said the Indian Biogas Association (IBA) in a statement.
A reduction of 7 percent (from 12 percent to 5 percent) in the applicable GST percentage for the MEB sector (compressed biogas) is expected that it will significantly improve the viability of the project, and the direct impact would translate into 4-5 percent increase (even in a conservative side) in new investments in the industrial term in the inner term. Indirectly the multiplier effect in the value chain of the industry would be much larger, it said.
By 2030 it is expected that $ 4-5 billion in private investments will be pumped into the Indian CBG industry.
This is in line with the aim of reducing the tax burden on the rest of the green energy sources, apart from biogas, such as windmills, generators on solar energy, solar lanterns and waste-to-energy systems.
The hope is that in combination with these devices, rural areas will have easier access to decentralized renewable energy.
The reduction of GST will lower the installation costs.
“This reform will not only make biogas more accessible, but also create jobs in production, installation and maintenance,” said are Shukla, president of the Indian Biogas Association, in the statement.
He even emphasized the fact that a complete analysis of the value chain must be done to understand the degree of impact at different levels.
“As a continuous attempt to make the MEB exo system more favorable, a special focus must be given in the future to the power -generating supply chain of components used in biogas plant equipment.
“This should tackle the issue of an inverted tax structure in which inputs (sub-components of CBG factory) attract a higher GST than the finished/assembled equipment, which is effectively transmitted to blow up the final project costs. Correcting this specific deviation will make projects more viable and great acceptance,” said. “
The relocation can support a significant increase in bioga projects throughout India, especially in the agricultural -oriented regions, with a promise of relatively cheap energy from organic waste.
The Indian Biogas Association is the first and largest national and professional biogas Association for stakeholders of the biogas industry, including technology suppliers, project developers, factory operators and planners of biogas plants and representatives of public policy, science and research in India.
Published on September 7, 2025
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