GST 2.0: Tax Benefits Proposed For Green Hydrogen & Battery Storage

Ahead of the final outcome of the 56th GST Council meet, green hydrogen, electrolysers and battery energy storage systems are expected to get cheaper.

The council chaired by Union Finance Minister Nirmala Sitharaman and has ministerial representatives from all states, will take up a proposal to only have a 5 per cent tax slab, 18 per cent, and 40 per cent for sin goods such as alcohol instead of the 12 percent and 28 percent slabs.

Green hydrogen and electrolysers are taxed at 18 percent, which will likely be lowered to 5 percent, as per media reports.

Meanwhile, the GST on battery storage is also expected to get reduced to 5 percent.

Currently, there is a disparity in the tax structure of batteries. The GST for lithium-ion batteries is 18 percent but others such as lead acid, sodium and flow batteries are taxed at 28 percent. On the other hand, for electric vehicles (EVs), the GST for batteries is already at 5 percent

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Gautam Mohanka, Director, Gautam Solar, said, "Today's decision by the GST Council to reduce the GST rate on solar components from 12% to 5% marks a pivotal step in accelerating India's clean-energy transition. This significant reform greatly increases the accessibility of solar installations for households, businesses, and farmers across the country.

"At a time when India and the world are facing extreme weather events, rising temperatures, and erratic climate patterns, the need to decarbonize our energy systems is urgent. By reducing this financial barrier, the government is making solar power more affordable and enabling faster adoption, which will directly help cut carbon emissions and reduce dependence on fossil fuels," he said.