In a written reply to Unstarred Question No. 2327 in the Lok Sabha on December 15, 2025, the Minister of State in the Ministry of Finance, Shri Pankaj Chaudhary, outlined the structure and expected economic impact of GST 2.0, highlighting its role in strengthening consumption, investment, formalisation and India’s global competitiveness.
The Minister stated that GST 2.0 has rationalised and simplified the tax rate structure, with a focus on reducing the burden on essential goods, services and emerging sectors. These measures are expected to lower the cost of living, improve affordability and stimulate household consumption, while also enhancing trade competitiveness and supporting domestic industry.
A simplified two-rate GST structure is expected to reduce transaction costs and compliance burden, particularly for small businesses. This, in turn, is likely to encourage greater participation in the formal economy, widen the tax base and support higher GDP growth through increased consumption, investment and job creation. The Minister informed the House that recent high-frequency indicators—such as higher e-way bill generation, improved PMI readings, robust UPI transactions and strong automobile and tractor sales during September–October 2025—reflect strengthening economic momentum following the GST reforms.
Aligned with the Viksit Bharat 2047 vision, GST 2.0 is also aimed at reinforcing India’s position as a global manufacturing and investment destination. Key initiatives include GST rate reductions on cement and construction materials to lower project costs and accelerate infrastructure and real estate development, and reduction of GST on small cars, two-wheelers and auto parts from 28% to 18% to strengthen the automotive manufacturing base. Exemptions and concessional rates on specified life-saving drugs, health and life insurance, and medical devices are expected to improve healthcare access, while lower GST on manmade fibres, yarns, carpets and intermediate leather products is intended to support labour-intensive MSMEs and boost exports.
On GST revenues, the Minister informed that gross GST collections have shown a steady increase over the last five years, rising from ₹11.36 lakh crore in 2020–21 to ₹22.09 lakh crore in 2024–25. GST revenue for November 2025 stood at ₹1.70 lakh crore, registering a year-on-year growth of 0.7 per cent. However, GST collection data is not maintained constituency-wise or district-wise.
To improve liquidity for businesses, particularly MSMEs and exporters, the Minister noted that the GST Council, in its 56th meeting, recommended amendments to provide provisional refund of 90 per cent of refund claims arising out of inverted duty structure. Pending legislative amendments, CBIC has already issued instructions effective 1st October 2025 for granting such provisional refunds based on system-based risk evaluation, ensuring that working capital is not blocked.
The Minister further stated that the Government has consulted States, industry bodies and other stakeholders following the 56th GST Council meeting to ensure a smooth transition to GST 2.0 and effective implementation of the reform measures.
The Reply can be accessed at: https://a2ztaxcorp.net/wp-content/uploads/2025/12/GST-2.0-Structure-and-Economic-Impact.pdf
