Reduction in GST rates will boost private investment in biogas sector

New Delhi: The reduction of Goods and Services Tax (GST) on biogas plants and devices will boost private investment in the sector, the Indian Biogas Association said on Sunday.

The GST on biogas plants and devices has been cut to 5 per cent from 12 per cent, effective September 22. The GST Council, comprising the Centre and states, last week decided to cut tax rates on 375 items and reduce the number of slabs to just 2 from 4 currently.

From September 22, a 5 per cent GST will be levied for most common-use goods and 18 per cent on everything else. The GST Council took a unanimous decision to do away with the 12 and 28 per cent slabs, the biggest rejig in 8 years since GST was rolled out on July 1, 2017.

Biogas plants and devices should become cheaper and more accessible and more financially attractive for investment, said the Indian Biogas Association (IBA) in a statement.

A reduction of 7 per cent (from 12 per cent to 5 per cent) in the applicable GST rate for the CBG (compressed biogas) sector is expected to significantly improve project viability, and the direct impact would translate into 4-5 per cent increase (even on a conservative side) in new investments in the industry over the short to medium term. Indirectly, across the industry value chain, the multiplier effect would be much larger, it said.

By 2030, $4-5 billion of private investment is anticipated to be pumped into the Indian CBG industry.