New Delhi, March 23 Reforms in the Goods and Services Tax (GST), such as reducing tax rates on waste management services and biodegradable products, will accelerate the adoption of eco-friendly manufacturing, strengthen waste treatment infrastructure, and promote sustainable mobility solutions, the environment ministry said on Monday.
In September last year, the government introduced important changes to the GST, rationalizing tax rates. While the GST was reduced from 12 per cent to 5 per cent on services provided by common effluent treatment plants (CETPs), it was slashed from 18 per cent to 5 per cent on biodegradable bags.
For buses and commercial goods vehicles, the GST was reduced to 18 per cent from 28 per cent.
"These GST reforms make waste management, biodegradable products, and green mobility more affordable and accessible. By reducing costs and supporting sustainable industries, these changes reinforce India's leadership in the global fight against climate change and lay the foundation for a cleaner, healthier, and more sustainable future," the ministry said in a statement.
The reduction in tax rates on services provided by CETPs will make collective waste treatment more attractive to small and medium enterprises, which often struggle with individual management costs, it said.
"With 222 operational CETPs treating 2,212 million litres per day (MLD) of industrial wastewater across 21 states, the tax reduction is estimated to save industries approximately Rs 13.27 crore per day. Also, this reform supports the 53 CETPs already implementing Zero Liquid Discharge (ZLD) systems, promoting the reuse of treated wastewater and reducing freshwater dependency," the ministry said.
The reduced GST on biodegradable bags is expected to lower the sale price of compostable carry bags by approximately 11 per cent (from Rs 200/kg to Rs 178/kg), making eco-friendly alternatives competitive with conventional plastic.
The move is also expected to encourage more than 200 certified compostable manufacturers to scale up production of starch-based and compostable materials, the statement said.
The decreased tax rate on buses and commercial vehicles aims to clean the air in Indian cities by modernizing the country's fleet.
"Lower upfront costs encourage operators to replace older, polluting vehicles with new BS-VI compliant models, which are up to 10 times cleaner than BS-IV standards," the ministry said.
