GST 2.0 Reforms A Boost For India’s Energy Storage & Battery Innovation: IESA

New Delhi, Sep 9 (KNN) The India Energy Storage Alliance (IESA) on Monday welcomed the new tax regime under GST 2.0, describing it as a significant step toward supporting India’s future energy storage needs. 

According to IESA, several key recommendations from the industry body have been adopted by the GST Council.

A major policy shift under GST 2.0 has streamlined the tax rate for all advanced batteries under heading 8507 to a uniform 18 percent, replacing the earlier system where lithium-ion batteries were taxed at 18 percent and other chemistries at 28 percent. 

IESA highlighted that this change 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.

However, some recommendations remain under active consideration. 

Proposals to reduce GST on parts used in electric vehicle (EV) manufacturing from 18–28 percent to 5 percent are still under review, with the Fitment Committee citing concerns over an inverted duty structure. 

Similarly, GST on cathode coatings and separators for lithium-ion batteries remains at 28 percent to prevent classification disputes. 

Proposed reductions on EV charging and battery swapping services from 18 percent to 5 percent, or reclassifying them as electricity supply, have also not been approved, though the Council will clarify the nature of the services.

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 emphasised 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.

(KNN Bureau)