Ahead of Budget 2026, CSE Seeks GST Cut on Recyclable Waste

Union Budget 2026: Environmental experts urge reduction in GST on recyclable waste

As the government prepares the Union Budget 2026, environmental experts have urged a reduction in Goods and Services Tax (GST) on recyclable waste, calling it a critical reform to strengthen India’s transition towards a green and circular economy.

In a letter addressed to Union Finance Minister Nirmala Sitharaman, Centre for Science and Environment (CSE) Director-General Sunita Narain flagged that the current GST framework treats recycled materials at par with virgin raw materials. This, she said, effectively penalises recycling industries that are essential for reducing resource dependency and environmental damage.

“India is moving towards a greener economic transformation through policy interventions across sectors such as energy, industry, waste, transport and agriculture. GST and fiscal structures can play a decisive role in accelerating this transition,” Narain stated.

According to CSE’s latest assessment, the prevailing GST regime on recyclable waste has resulted in a dual setback. High tax rates have pushed a significant portion of recycling transactions into the informal sector, while simultaneously weakening domestic recycling capacity, resource security and industrial competitiveness.

The study estimates that reducing GST on recyclable waste to 5 per cent or zero — coupled with full integration of informal supply chains — could convert the current fiscal loss into a net gain exceeding ₹90,000 crore.

“Our analysis covered 12 major waste and recycling sectors, including metal scrap, plastic waste, e-waste, battery waste, paper, glass, tyres and end-of-life vehicles. In every sector, the potential for reuse and value recovery is enormous,” said Nivit K Yadav, Programme Director, Industrial Pollution, CSE.

Experts further pointed out that such reforms would strengthen micro, small and medium enterprises (MSMEs), improve livelihoods for millions of informal workers, and reduce India’s reliance on imported virgin raw materials.

In a related assessment, CSE highlighted that reuse of industrial waste — such as slag, fly ash and municipal waste in cement manufacturing, and steel scrap in iron and steel production — offers a significant opportunity for waste reduction and decarbonisation. However, the existing 18 per cent GST on recycled and low-carbon materials acts as a major disincentive.

Parth Kumar, Programme Manager, Industrial Pollution at CSE, explained that while India produces multiple types of cement with varying carbon footprints, GST makes no distinction based on emission intensity. Ordinary Portland Cement (OPC), the most carbon-intensive variant, is taxed at the same rate as greener alternatives that use waste-derived raw materials, leaving industries and consumers with no incentive to shift towards low-carbon options.

In her letter, Narain emphasised that GST reform would formally recognise “waste as a resource”. “By relaxing the tax burden, we can level the playing field for green enterprises, secure our resource future, and protect millions of vulnerable workers dependent on the recycling economy,” she wrote.

Source: News18