Slashing GST on waste can unlock Rs 1.8 lakh crore, high tax hurting circular economy goals—CSE
The Indian government is sitting on a hidden revenue of lakhs of crores—from the waste recycling sector, the Centre for Science and Environment (CSE) has said in a new report released Tuesday, arguing that reducing 18% Goods and Services Tax (GST) on several crucial waste categories could bring in Rs 1.8 lakh crore in additional revenue by 2035. Under the GST framework in India, scrap materials are treated as goods, and they are subject to GST when sold or traded. Further, the waste management sector in India is divided into the formal and informal sector. The formal sector consists of registered businesses that follow tax regulations, including GST, while the informal sector operates outside this framework. “Most small dealers who collect scrap cannot afford an 18% GST, so they keep their transactions cash-based and untaxed,” CSE said in a release on the report. “These unrecorded transactions lead to estimated Rs 65,000 crore annual GST losses for the government.” The report, titled ‘Relax the Tax: Facilitating Waste Circularity Ecosystem through GST Rationalization’, states how heavy GST rates on different products obstruct the circular economy around waste recycling in India. From the same tax rates for virgin and recycled products, to a high 18% GST on metal scrap, plastic waste and e-waste, the report explains how the existing GST regime doesn’t incentivise and actively hinders waste recycling. Waste recycling and circular economy are seen as pillars of India’s sustainable development policies, with Union Minister for Environment Bhupender Yadav announcing this March that India’s circular economy could create $2 trillion in market value by 2050. Initiatives like the NITI Aayog’s Circular Economy Cell and Circular Economy Action Plans for different waste categories like plastic, e-waste, industrial waste, hazardous waste and metal waste indicate the government’s efforts towards this end.
