The Indian Biogas Association said on Sunday (September 7, 2025) that the reduction of Goods and Services Tax (GST) on biogas plants and devices is soon going to boost private investment in the sector.
The GST on compressed biogas plants and devices is going to be reduced from 12% to 5%, effective from September 22.
The GST council, involving the centre and states, announced last week to cut tax rates on 375 items and reduce the number of slabs to just 2 from 4 currently.
From September 22, a 5% GST will be charged for most common-use goods and 18% on everything else. The GST Council unanimously decided to eliminate the 12% and 28% slabs, marking the most significant overhaul since the introduction of GST on July 1, 2017.
The Indian Biogas Association (IBA) said, “The biogas plants and devices should become cheaper and more accessible and more financially attractive for investment.”
Moreover, a 7% cut in the GST rate for the CBG (compressed biogas) sector, lowering it from 12% to 5% is expected to improve project viability substantially. This change could directly drive a 4-5% increase in new investments in the sector, even on a conservative estimate, over the short to medium term. Indirectly, the multiplier effect across the entire industry value chain is anticipated to be far more significant, the report noted.
It is believed that biogas companies in India are going to invest ₹4-5 billion into the CBG industry.
This aligns with reducing the tax burden on other green energy sources apart from biogas, including wind turbines, solar generators, solar lanterns, and waste-to-energy systems.
It is expected that with the help of these devices, rural areas will more easily be able to access decentralised renewable energy.
Additionally, minimising GST will also reduce the installation expenses.
Indian Biogas Association president AR Shukla said in the statement that “This reform will not only make biogas more accessible but also create jobs in manufacturing, installation, and maintenance.”
He also highlighted the fact that a complete value chain analysis needs to be done to understand the extent of impact at different levels.
Shukla even added that,” As a continued effort to make the CBG ecosystem more conducive, going forward, a special focus should be given to the upstream supply chain of components used in biogas plant equipment.
Doing so shall address the issue of an inverted tax structure where inputs (subcomponents of CBG plant) attract higher GST than the finished/assembled equipment, which effectively is passed on to inflate the final project cost. Correcting this particular anomaly will make projects more viable and encourage large-scale adoption.”
In the end, this initiative by the government can support a substantial increase in biogas projects throughout India, especially in the agriculture-focused regions, with a promise of relatively low-cost energy from organic waste.
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