**Executive Summary**
This document is the answer provided by the Minister of State in the Ministry of Finance to Unstarred Question No. 2506 regarding the impact of GST 2.0 on businesses and MSMEs in Dahod. It outlines the benefits received by small traders, artisans, and agricultural produce sellers in the Dahod Lok Sabha constituency through simplified GST, the impact of increasing e-commerce platforms on competition and consumption, and whether GST 2.0 will attract investment in the Dahod Lok Sabha constituency. The changes are based on the recommendations of the 56th GST Council meeting held on 03.09.2025. The changes regarding refunds based on the inverted duty structure are effective from 1st October 2025, and the simplified GST registration scheme is effective from 1st November 2025.
**Key Points / Main Content**
* **GST Rate Structure and Rationalization:**
* A citizen-friendly ‘Simple Tax’, a 2-rate structure with a Standard Rate of 18% and a Merit Rate of 5% has been introduced; a special de-merit rate of 40% for a select few goods and services.
* GST rate reductions from 18% or 12% to 5% on common items like hair oil, toilet soap, shampoos, toothbrushes, and toothpaste.
* GST rate reductions from 12% or 18% to 5% on almost all food items, including packaged namkeens, bhujia, sauces, pasta, instant noodles, chocolates, coffee, and preserved meat.
* GST rate reduction from 12% to 5% on agricultural goods like tractors and forestry machinery.
* GST rate reduction from 12% to 5% on handicraft goods such as furniture made of bamboo, ratan, and cane, artwares of iron, stone, aluminum, carved wood products, etc.
* **Simplified GST Registration Scheme:**
* An optional simplified GST registration scheme is introduced.
* Registration shall be granted on an automated basis within three working days from the date of submission of application in case of low-risk applicants.
* Applies to applicants who, based on their assessment, determine that their output tax liability on supplies to registered persons will not exceed Rs. 2.5 lakh per month.
* Effective from 1st November 2025.
* **Refunds on Inverted Duty Structure:**
* The GST Council recommended amending the CGST/SGST Acts to provide for a provisional refund of 90% of the claimed amount in cases arising out of an inverted duty structure.
* The Central Board of Indirect Taxes and Customs has issued instructions to its field formations to grant refunds on a provisional basis equivalent to 90% of the refund claimed.
* Based on the identification and evaluation of risk by the system.
* Effective from 1st October 2025.
**Impact Analysis**
**Small Traders, Artisans, and Agricultural Produce Sellers in Dahod**
* **Impact**
* Benefit significantly from rate rationalization and process reforms.
* **Action Required**
* Adapt to the new GST rates on various goods and services.
* Consider simplified GST registration scheme if eligible.
* Claim refunds on inverted duty structures, if applicable, following the new process.
**E-commerce Platforms**
* **Impact**
* Increased competition and consumption in Dahod Lok Sabha constituency.
* **Action Required**
* Update systems to reflect new GST rates.
* Ensure compliance with new refund procedures.
**Central Board of Indirect Taxes and Customs Field Formations**
* **Impact**
* Implementation of the new provisional refund process.
* **Action Required**
* Grant refunds on a provisional basis equivalent to 90% of the refund claimed arising out of inverted structure based on the identification and evaluation of risk by the system.
**Businesses and MSMEs in Dahod Lok Sabha constituency**
* **Impact**
* Increased investment may occur in the Dahod Lok Sabha constituency as a result of GST 2.0
* **Action Required**
* Consider the impact of GST 2.0 on investment opportunities in the Dahod Lok Sabha constituency.
Key Entities Referenced
GST Council: A body responsible for making recommendations related to Goods and Services Tax (GST), as mentioned in the context of the 56th GST Council meeting.
GST 2.0: Referenced in the question, it refers to an updated or modified version of the Goods and Services Tax (GST) system, potentially involving simplified procedures and revised rates.
Dahod: A location (Lok Sabha constituency) which is central to the scope of the policy's impact, as the question specifically concerns the impact of GST 2.0 on businesses and MSMEs in Dahod.
Ministry of Finance: The government ministry responsible for matters related to finance, the minister of which is being questioned about the impact of GST 2.0.
CGST/SGST Acts: Central Goods and Services Tax Act/State Goods and Services Tax Act. Acts that GST council recommended amending the provisions of to provide for the provisional refund of 90% of the claimed amount in cases arising out of an inverted duty structure.
GOVERNMENT OF INDIA
MINISTRY OF FINANCE
DEPARTMENT OF REVENUE
LOK SABHA
UNSTARRED QUESTION NO. 2506
TO BE ANSWERED ON MONDAY, DECEMBER 15, 2025/AGRAHAYANA
24, 1947 (SAKA)
IMPACT OF GST 2.0 ON BUSINESSES AND MSMES IN DAHOD
2506. SHRI JASWANTSINH SUMANBHAI BHABHOR:
Will the Minister of FINANCE be pleased to state:
(a) the benefits received by the small traders, artisans and
agricultural produce sellers of Dahod Lok Sabha constituency
through simplified GST;
(b) the impact of increasing e-commerce platforms on competition
and consumption in Dahod Lok Sabha constituency; and
(c) whether the GST 2.0 will attract investment in Dahod Lok Sabha
constituency?
ANSWER
MINISTER OF STATE IN THE MINISTRY OF FINANCE
(SHRI PANKAJ CHAUDHARY)
(a), (b) and (c) Based on the recommendations of the 56th GST
Council meeting held on 03.09.2025, a citizen friendly ‘Simple Tax, a
2 rate structure with a Standard Rate of 18% and a Merit Rate of 5%
has been introduced ; a special de-merit rate of 40% for a select few
goods and services. The GST reforms notified on the
recommendations of the 56th GST Council meeting held on
03.09.2025 are uniform across the country. Small traders, artisans,
and agricultural produce sellers in Dahod will also benefit
significantly from rate rationalization and the process reforms.
There has been reduction of GST from 18% or 12% to 5% on a host
of common man items, sold by small traders, such as, hair oil, toilet
soap bars, shampoos, toothbrushes, toothpaste, among others.
Also, there has been a reduction of GST from 12% or 18% to 5% on
almost all of the food items such as packaged namkeens, Bhujia,
Sauces, Pasta, Instant Noodles, Chocolates, Coffee, PreservedMeat, Cornflakes, Butter, Ghee, etc. Further, reduction of GST from
12% to 5% on agricultural goods, such as tractors, agricultural,
horticultural or forestry machinery for soil preparation or cultivation,
harvesting or threshing machinery, including straw or fodder balers,
grass or hay mowers, composting machines etc. has also been
carried out. Artisan will also benefit from a rate reduction from 12%
to 5% in terms of handicraft goods such as furniture made of
bamboo, ratan, and cane, artwares of iron, stone, aluminium, carved
wood products, etc.
In addition to the above, in order to simplify the registration
process, an optional simplified GST registration scheme has been
introduced wherein registration shall be granted on an automated
basis within three working days from the date of submission of
application in case of low risk applicants and applicants who based
on their own assessment, determine that their output tax liability on
supplies to registered persons will not exceed Rs. 2.5 lakh per
month w.e.f. 1st November 2025.
Further, to ensure seamless credit flow and prevent tax cascading,
the GST Council in its 56th Council meeting recommended
amending the provisions of the CGST/SGST Acts to provide for the
provisional refund of 90% of the claimed amount in cases arising out
of an inverted duty structure, on similar lines as is presently
available for refund in respect of zero-rated supply refund claims.
Pending amendments in the CGST/SGST Acts, the Central Board of
Indirect Taxes and Customs has issued instructions to its field
formations to grant refunds on a provisional basis equivalent to 90%
of refund claimed, arising out of Inverted Structure based on the
identification and evaluation of risk by the system w.e.f. 1st October
2025.
*****