Biodiesel Association Seeks VAT Relaxation From States On Blending Of Biodiesel For Fuel Security





Science, 12 Oct - 2016 ,

Biodiesel Association Seeks VAT Relaxation From States On Blending Of Biodiesel For Fuel Security
Algae Biofuel

DAI demands National Biodiesel policy and States to levy concessional VAT on Green Fuels like Biodiesel blends Biodiesel

DAI demands National Biodiesel policy and States to levy concessional VAT on Green Fuels like Biodiesel blends

Biodiesel Association of India (BDAI) has sought Value Added Tax (VAT) relaxation on blending of biodiesel from States for promoting green fuel Blending and energy security in the country.  Currently VAT on biodiesel blending goes upto 24 % in several states and the Association has warned that if the States do not provide promotional VAT rate on B5 Blends, the biodiesel blending in retail segment would be killed.

Biodiesel Association of India (BDAI) is making all efforts to impress upon the Centre and state governments about the benefits of promoting  green fuels like biodiesel. The Association, in its memorandum to the the Ministry of Petroleum & Natural Gas (MoP&NG) and the governmetns of major biodiesel producing states like Gujarat, AP, Telangana, Tamil Nadu, has sought VAT relaxation. The BDAI has also demanded that National Biodiesel Policy should be in place soon for fuel security.

“The states are required to declare a promotional VAT rate for Biodiesel blending. A small levy of 10 paise per litre on High Speed Diesel (HSD) could fund the entire blending programme,” Mr Sandeep Chaturvedi, President, BDAI said.

He further added that the industry is geared up to deliver 3mn tons Biodiesel by 2019. This will provide half million direct jobs, one million jobs to ancillaries. The direct and indirect job would be 4 million.”

Biodiesel is being promoted world over as a green fuels to mitigate harmful exhaust emissions (particulates and sulphur oxides) from diesel vehicles. The promotion of this green fuel will have a positive impact on the urban and rural lifestyle by reducing chronic airborne diseases and disorders that have significant adverse impact on health of citizens in our country. 

The Government of India has been taking various steps for reducing vehicular emission, which could improve ambient air quality. Biodiesel is the most appropriate tool being envisaged to achieve the GHG reduction targets. In order to bring about substantial reduction in emissions, it is essential that Biodiesel is made widely available to the common man through the retail outlets of the Oil Marketing Companies (OMCs).

Andhra Pradesh, Telangana, West Bengal, Tamil Nadu, Gujarat are leading Biodiesel producing states and these states charges 24 -30% VAT on blending. The Centre provides Excise relief for Biodiesel Blends that is once duty paid diesel is blended with biodiesel no additional duty is required. But none of the States has come forward to offer promotional VAT. This has resulted in Biodiesel getting taxed at the rate of 24-30% in the blended form.

“Biodiesel is the most efficient tool to bring down the particulate emission levels and biofuel economy, the State governments would have to offer promotional VAT rate for this green fuel blends. The state has to be proactive and take steps to bring down the emission levels in larger public interest.  Otherwise a time will come when judiciary or Green Tribunal would intervene,” Mr. Chaturvedi said.

 “The current blending programmer is largely supported by the central government. The Government is in office for 2 years now, the Association has been demanding a changed National Policy for Biofuels, that will encourage investment create millions of jobs with overall environmental protection.

The Used Cooking Oils are major health problem resulting in obesity, hearth and cancer in masses. There is a need to create awareness about the health hazard. The UCO could be used as a feedstock to manufacture Biodiesel. BDAI has been requesting for a National policy on Used Cooking Oil (UCO) that should ensure end traceability for vegetable oils, material balance by all major vegetable oil consumers. UCO Sales only to authorized collection agency.  This will ensure UCO elimination from our food chain,” he added.

India produces nearly 22 million tonnes of oil and nearly 2 million tonnes of UCO is available for blending. Imagine a city like Delhi with large amount of UCO can provide huge scope for blending and this can further enhance biofuel economy. Used Oil collection in system in metro cities will certainly offer urban jobs.

The BDAI President said that apart from green Fuel and environmental protection, tree born seed collection in the tribal areas will provide rural jobs.

It is promising to note that India has taken unprecedented initiatives in the field of bio fuels in the last two years. Several policy interventions and clearing of many hurdles in implementation of National blending targets have been under taken by Government of India. Ministry of Petroleum & Natural gas has given a big push for the Ethanol blending program and is close to achieving 5% blending at National level. The bio diesel blending program started on 10 August 2015 as a pilot in 4 cities has now been extended to 6 states and sold through nearly 3000 retail outlets in the country within a year. India is at the threshold of rapid scaling of the Bio fuel program and still have many challenges to be addressed.

BDAI pointed out that while India has a National policy in place challenges associated with taxation especially VAT by States need to be looked into and aggressively pursued.


Scientific India Newsletter

Enter your email address:


© 2013-2014 Scientific India Magazine

Note: This website is for educational Purposes only.