IBA For Blanket Corp Tax Holidays For Compressed Biogas Production

New Delhi: Indian Biogas Association (IBA) has urged the finance ministry to create blanket corporate tax holidays for compressed biogas (CBG) production in the forthcoming General Budget to attract investment in the sector to promote this renewable energy source.

Earlier this month, in a letter to Finance Minister Nirmala Sitharaman, IBA said that this will act as an incentive for businesses, which are willing to invest in and scale up CBG production, contributing to cleaner energy generation.

“It is proposed that the government create blanket corporate tax holidays for CBG production. In particular, a complete tax waiver should be introduced for CBG producers, which provides tax relief in the initial years of operation,” the industry body said. The finance minister is slated to present the Budget in Parliament on February 1.

It pointed out that in FY2024-25, with around 100 functional commercial CBG plants in India at their full capacity utilisation, the total CBG sales were approximately Rs1,200 crore. This means that with a complete tax waiver, the government would lose estimated Rs100 crore in tax revenue, it noted. This is a short-term loss, but it will help the renewable energy industry flourish in the long run. This move will help India meet its renewable energy goals, draw in private investment, and generate new employment, it suggested. The tax breaks, in this case, will also enable CBG producers to offer their products at competitive prices, which in turn boost the adoption of CBG in India’s energy mix, the industry body said. Additionally, IBA suggested that it will promote the usage of agricultural residues like paddy straw and crop wastes in biogas production rather than their burning, thereby reducing pollution. This change in policy will make a significant contribution to India’s shift towards a greener energy standpoint, it added.