The India Energy Storage Alliance (IESA) welcomed the new GST 2.0 reforms, calling them a significant step toward supporting India’s growing energy storage ecosystem. The reforms streamline the tax rate to 18% for all advanced batteries under heading 8507, replacing the earlier system that taxed lithium-ion batteries at 18% and other chemistries at 28%.
According to IESA, this uniform rate will encourage innovation across multiple technologies such as flow batteries, sodium-ion, and metal-air systems, while also ensuring a level playing field for non-lithium chemistries.
Pending Recommendations Under Review
While the GST Council accepted several of IESA’s recommendations, the Fitment Committee is actively reviewing others. The Council is still considering proposals to reduce GST on EV parts from 18–28% to 5%, citing concerns over an inverted duty structure. It continues to impose a 28% GST on cathode coatings and separators for lithium-ion batteries to avoid classification disputes. The authorities have not yet approved the suggested cuts on EV charging and battery swapping services from 18% to 5% or the proposal to reclassify them as electricity supply, though they are expected to issue clarifications.
Positive Signals for Clean Energy Ecosystem
IESA President Debmalya Sen praised the reforms, noting that the uniform 18% tax on batteries was a long-standing demand from the industry. He also pointed out other supportive measures under GST 2.0, including reductions for the Clean Hydrogen ecosystem—with ammonia GST lowered from 18% to 5% and GST on hydrogen fuel cell vehicles under four meters reduced from 12% to 5%.
Building Momentum for India’s Energy Transition
The alliance described the GST Council’s steps as forward-looking reforms that lower barriers for alternative battery chemistries and clean energy technologies. However, IESA stressed the importance of continued policy engagement to address pending rate reductions on EV parts, battery components, and charging services. As reported by knnindia.co.in, such measures, it emphasized, will be critical to ensuring that the tax framework fully supports India’s clean energy transition and energy storage ambitions.
