India has approved a series of Goods and Services Tax reductions aimed at lowering the cost of waste management, biodegradable products and cleaner vehicles, positioning the changes as part of its broader climate and sustainability agenda.
A key change includes lowering the GST on services provided by Common Effluent Treatment Plants (CETPs) from 12% to 5%, reducing the cost burden for small and medium enterprises. The move is expected to save industries approximately ₹13.27 crore per day across 222 operational CETPs treating industrial wastewater in 21 states. The measure also supports circular economy efforts, particularly among the 53 CETPs already implementing Zero Liquid Discharge systems to promote water reuse and reduce freshwater consumption.
The government has also reduced GST on biodegradable and compostable carry bags from 18% to 5%. According to the release, this cut is expected o bring down the sale price of such bags by roughly 11%, from about ₹200 per kilogram to around ₹178 per kilogram, with the aim of encouraging a shift away from conventional single-use plastic bags.
In the transport sector, GST on buses and commercial goods vehicles has been reduced from 28% to 18% to encourage fleet modernization and cleaner air in Indian cities. The lower tax rate is designed to expedite the replacement of older vehicles with BS-VI compliant models, which produce significantly fewer emissions. The reduction could also improve public transport affordability and logistics efficiency, supporting economic growth while reducing the sector’s carbon footprint.
The government links these tax changes to its commitments on climate action, including its Net Zero ambitions, and to national initiatives such as Viksit Bharat 2047 and the LiFE (Lifestyle for Environment) campaign. The steps are presented as reinforcing India’s efforts to align fiscal policy with environmental and sustainability goals
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