The GST Council, in its 56th meeting held in New Delhi on September 3, reduced the tax on renewable energy devices and parts used for their manufacture, from biogas plants, windmills, wind-operated electricity generators, waste-to-energy plants, photovoltaic cells, solar cookers, and solar water systems, to 5%.
“GST has been reduced from 12% to 5% on renewable energy devices and parts for their manufacture such as biogas plants, windmills, wind-operated electricity generators, waste to energy plants, devices, PV cells, whether or not assembled in modules or made up in panel, solar cookers, solar water heaters and systems, and so on,” Finance Minister Nirmala Sitharaman said at a press briefing.
Sitharaman said the revised tax rates will come into effect from September 22.
Wider reforms in energy and mobility
Alongside, the Council cut GST on non-lithium-ion batteries such as lead acid, sodium, and flow batteries to 18% from 28% to support grid-scale storage technologies. Lithium-ion batteries will continue to attract 18%.
Apart from electric vehicles, which already enjoy a 5% rate, fuel-cell cars, buses and trucks will now also be taxed at 5%, down from 12%, to encourage hydrogen-powered mobility under the National Green Hydrogen Mission.
Sector impact
The reduced tax is expected to benefit companies such as Adani Green Energy, KPI Green Energy, Sterling & Wilson Renewable Energy, Tata Power, Waaree Energies, Reliance Industries, NTPC Ltd and ReNew. Market participants say lower costs on solar equipment and related devices could attract more investment and help speed up the adoption of non-fossil fuel energy.
The announcement comes as part of the Council’s broader rationalization exercise, which collapsed the 12% and 28% tax slabs to retain only the 5% and 18% brackets for most goods. Cement’s inclusion in the lower slab marked another milestone in aligning industrial inputs with the government’s “next-generation GST reform” agenda, unveiled by Prime Minister Narendra Modi on August 15.
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