GST cuts on waste management, biodegradable products, transport to drive green transition
Lower taxes aimed at boosting circular economy, clean mobility, and MSME participation
New Delhi: India has rolled out targeted GST rationalisation measures to accelerate its green transition, reducing tax rates on waste management services, biodegradable products, and commercial transport to make sustainable alternatives more affordable and scalable, according to the Ministry of Environment, Forest and Climate Change.
The reforms are aligned with India’s net zero 2070 commitment and broader initiatives such as Viksit Bharat 2047 and the Lifestyle for Environment (LiFE) movement, with a focus on strengthening circular economy practices and clean mobility adoption, the ministry said in a statement on Monday.
A key measure includes reducing GST on services provided by common effluent treatment plants (CETPs) from 12% to 5%, aimed at improving industrial wastewater management and lowering compliance costs for MSMEs.
With 222 CETPs currently treating over 2,200 million litres per day of industrial wastewater across 21 states, the tax reduction is expected to generate daily savings of approximately ₹13.27 crore for industries. The move is also expected to accelerate adoption of zero liquid discharge systems, enabling reuse of treated water and reducing dependence on freshwater resources.
In a push to combat plastic pollution, GST on biodegradable carry bags has been cut from 18% to 5%, narrowing the cost gap between eco-friendly alternatives and conventional plastics. Prices of compostable bags are expected to fall by around 11%, improving their competitiveness in the retail market, it said.
The measure is expected to support more than 200 certified manufacturers producing compostable materials and reinforce efforts to reduce plastic waste in marine and terrestrial ecosystems.
The government has also reduced GST on buses and commercial goods vehicles from 28% to 18%, aiming to modernise India’s transport fleet and reduce emissions.
Lower upfront costs are expected to encourage fleet operators to replace older vehicles with BS-VI compliant models, which are significantly cleaner than previous standards. The move is also likely to boost public transport capacity and improve logistics efficiency by reducing operating costs.
The combined impact of these reforms is expected to lower the cost of sustainable practices across sectors, improve adoption of green technologies, and strengthen India’s position in global climate action, it added.
