GST Council Recommends Slashing Tax on Green Hydrogen to Boost Adoption in India
Key Ideas
- A panel under the GST Council in India has proposed reducing the tax rate on green hydrogen from 18% to 5% to promote affordability and accelerate adoption in the clean energy sector.
- Tax cuts are also recommended for electrolysers and energy storage batteries, aligning with the government’s strategy to bolster green energy infrastructure.
- The decision on the proposed rate cuts will be made at the next GST Council meeting in July, following lobbying efforts by the clean energy industry to enhance the competitiveness of green hydrogen solutions.
- Global cooperation through initiatives like the India-EU Clean Energy and Climate Partnership is further supporting India's green hydrogen goals, emphasizing joint research, development, and potential imports of green hydrogen technologies.
A panel within the Goods and Services Tax (GST) Council in India has suggested a significant reduction in the tax rate on green hydrogen from 18% to 5%, aiming to make this clean energy source more affordable and drive its adoption across the country. The proposal also includes lowering the tax rates on electrolysers and energy storage batteries to 5%, in line with the government's broader strategy to support green energy infrastructure. These recommendations will be presented at the upcoming GST Council meeting in July, where a decision will be made regarding the implementation of the suggested tax cuts.
The move has been well received by the clean energy industry, which has actively advocated for these changes, citing that high GST rates were impeding the affordability and competitiveness of green hydrogen and energy storage solutions. The industry anticipates that reduced taxes will not only spur quicker adoption of these technologies but also assist India in progressing towards its renewable energy and decarbonization objectives.
Furthermore, international collaborations such as the India-EU Clean Energy and Climate Partnership are reinforcing India's ambitions in the green hydrogen sector. Through this partnership, joint efforts in research, development, and the possibility of green hydrogen imports are being promoted, underscoring the significance of enhancing the accessibility of green hydrogen technologies for a sustainable energy future.