The India Energy Storage Alliance (IESA) has welcomed the new tax regime under GST 2.0, calling it a significant step towards supporting India’s future energy storage needs. The GST Council has adopted several key recommendations from the industry body, including streamlining the tax rate for all advanced batteries to a uniform 18 percent. This change replaces the earlier system where lithium-ion batteries were taxed at 18 percent and other chemistries at 28 percent.
According to IESA, this policy shift will encourage innovation across diverse battery technologies, including flow batteries, sodium-ion, and metal-air systems, and create a more level playing field for non-lithium-ion chemistries. The alliance has been advocating for a uniform tax rate for all batteries, and this change is seen as a major victory for the industry.
However, some recommendations are still under consideration, including proposals to reduce GST on parts used in electric vehicle (EV) manufacturing from 18-28 percent to 5 percent. The Fitment Committee has cited concerns over an inverted duty structure, and the proposal is still under review. Similarly, GST on cathode coatings and separators for lithium-ion batteries remains at 28 percent to prevent classification disputes.
IESA President Debmalya Sen welcomed the reforms, noting that the uniform 18 percent rate for all batteries is a long-standing industry demand. He also highlighted recent GST reductions for the Clean Hydrogen ecosystem, including a cut in ammonia GST from 18 percent to 5 percent and a reduction for hydrogen fuel cell vehicles under four meters from 12 percent to 5 percent.
The alliance praised the GST Council’s measures as forward-looking reforms that lower barriers for alternative battery chemistries and clean energy technologies. IESA emphasized the importance of continued engagement to address pending rate reductions for EV parts, battery components, and charging services, ensuring the tax framework fully supports India’s clean energy transition. Overall, the new tax regime under GST 2.0 is seen as a positive step towards supporting India’s energy storage needs and promoting the growth of the clean energy sector.