Analysis of GST-Related Parliamentary Questions: Winter Session 2025

Introduction

This analysis looks at the questions raised about the Goods and Services Tax (GST) during the Lok Sabha Winter Session of 2025, and the Finance Ministry answers range from important structural changes and their economic effects to administrative problems and revenue concerns at the state level. This write-up offers a summary examines the main themes discussed and highlights the Finance Ministry’s key policy positions. This analysis aims to clarify the main areas of legislative focus and the government's current priorities and policy direction regarding the national GST framework.

Quantitative Overview of GST-Related Inquiries

A quantitative look at parliamentary questions offers a way to measure legislative focus and the level of debate around a specific policy area, such as GST. The table below summarizes the number of questions analysed in this report.

Greater reliance on Unstarred Questions (14 out of 15) indicates a legislative focus on obtaining detailed, factual, and on-record data from the Ministry, rather than engaging in oral debate.

Thematic Analysis of Parliamentary Scrutiny

Beyond the figures, thematic analysis highlights the administrative difficulties, economic worries, and policy concerns at the centre of the national GST debate. The content of the parliamentary questions is categorized and examined in this section, which sheds light on the main concerns of lawmakers and the government's corresponding policy responses.

GST Rate Rationalisation and “GST 2.0” Reforms

A dominant theme of the session was the government's recent overhaul of the GST rate structure (GST 2.0). Based on the recommendations of the 56th GST Council meeting, the government introduced a simplified tax structure with the stated objectives of lowering the cost of living, stimulating the economy, and enhancing the ease of doing business.

The Ministry of Finance expects this rationalisation to stimulate household consumption, enhance trade competitiveness, and strengthen India's position as a global manufacturing and investment destination, ultimately boosting GDP growth

Revenue Impact Assessment

The government stated that the initiative is projected to have a net negative revenue impact of ‘about Rs. 47,700 Crore’. This figure is derived from an estimated gross negative impact of Rs. 93,300 Crore, partially offset by an additional Rs. 45,570 Crore in revenue from items moving to the new 40% Demerit Rate. However, the ministry cautioned that these figures are not definitive, as lower rates are expected to improve compliance and overall tax buoyancy. This anticipated shortfall is a calculated trade-off for the expected economic stimulus, the details of which are evident in the specific rate changes applied to key consumer and industrial sectors.

Consumer and Sectoral Impact

In response to legislative concerns about benefits reaching consumers, the ministry confirmed that the Central Board of Indirect Taxes and Customs (CBIC) is actively monitoring prices to ensure rate reductions are passed on.

GST Compensation and State Revenue Concerns

The cessation of the GST compensation period remained a significant point of contention for several states.

Government's Constitutional Stance

Ministry reiterated its firm position that, as per the Constitution (One Hundred and First Amendment) Act, 2016, compensation to states for revenue loss was mandated for a five-year period, which concluded on June 30, 2022. Consequently, the mechanism has been discontinued as per the original constitutional provision.

Responses to State-Specific Claims

The Ministry provided consistent responses to inquiries from multiple states regarding pending dues and future support, indicating that all settled claims have been paid and no new mechanism is planned.

• Andhra Pradesh: The government has released all ‘provisionally admissible’ and ‘final’ GST compensation to the state.
• Jharkhand: The ‘entire amount of provisionally admissible GST compensation’ and final reconciled amounts have been released.
• Karnataka: When asked about a potential alternative mechanism to compensate for post-compensation revenue loss, the ministry's unequivocal response was, ‘No such proposal is under consideration’.
• Kerala:The ministry acknowledged Kerala's specific concerns regarding a potentially higher revenue loss due to its unique consumption patterns, noting the state's own estimate projecting a total annual revenue loss of ‘more than Rs. 8,000 Crores’.

GST Administration, Compliance, and Anti-Evasion Measures

Strengthening the administrative framework of GST to combat fraud and ease compliance for honest taxpayers was another key area of focus.

Anti-Fraud Initiatives

The government detailed its concerted efforts to tackle fraudulent GST registrations used for fake billing and tax evasion. The scale of this challenge is significant, as outlined in the data provided in response to Unstarred Question No. 2451.

Key Enforcement and Verification Measures

To counter these fraudulent activities, the government has implemented a multi-pronged, technology-driven strategy. The key measures include]:

1. Nationwide Special Drives: Coordinated campaigns involving central and state tax officials conduct physical verification of business premises to identify non-existent taxpayers.
2. Biometric-Based Aadhaar Authentication: Implemented for new GST registration applications to enhance identity verification.
3. Geo-tagging: Mandatory geo-tagging of business premises for new registrations to aid in risk assessment.
4. System-Based Risk Profiling: All applications are assigned a risk rating using data analytics, enabling targeted verification by tax officers.
5. DGARM Analytics: The Directorate General of Analytics and Risk Management (DGARM) uses data analytics to identify suspicious registrations where misuse of PAN credentials is suspected and to flag risky taxpayers created for bogus invoicing.

Simplification for MSMEs and Startups

The government highlighted several measures aimed at simplifying compliance for smaller businesses:

• The registration threshold for suppliers of goods was increased to an annual turnover of Rs. 40 lakhs.
• The Quarterly Return Monthly Payment (QRMP) scheme allows taxpayers with a turnover of up to Rs. 5 crores to file returns quarterly instead of monthly.
• An optional simplified GST registration scheme has been introduced, allowing automated registration grants within three working days for low-risk applicants.

Role of Automation

The Ministry emphasized the transformative impact of automation, e-invoicing, and the use of AI. These technologies have enhanced transparency, reduced information mismatches, streamlined Input Tax Credit (ITC) reconciliation, and minimized the scope for tax evasion, thereby contributing to improved fiscal stability.

Scope of GST: The Debate on Petroleum and Alcohol Inclusion

The long-standing debate over bringing high-revenue items like petroleum and alcohol under the GST framework was addressed.

Constitutional and Legal Position

In its response to Unstarred Question No. 1176, the ministry clarified the distinct legal and constitutional barriers preventing the immediate inclusion of these items.

• Alcoholic Liquor: This falls under Entry 51 of the State List of the Seventh Schedule of the Constitution, granting states the exclusive power to levy excise duty.
• Petroleum Products: Their inclusion is governed by Article 279 A (5) of the Constitution, which mandates a formal recommendation from the GST Council. The council has not yet made such a recommendation; notably, during its 55th meeting, it recommended maintaining the ‘status quo’ on this issue.

Sector-Specific GST Applications: The Case of MPLADS

An inquiry regarding the application of GST to development works funded under the Members of Parliament Local Area Development Scheme (MPLADS) highlighted the government's policy on end-use-based exemptions.

Inquiry and Ministerial Response

In response to Unstarred Question No. 2505, which raised concerns about 18% GST reducing the effective value of MPLADS funds, the ministry clarified that the transfer of funds itself is not a supply and therefore not taxable. However, the procurement of goods and services using those funds is subject to applicable GST rates.

Policy Rationale

The GST Council had previously considered an exemption for MPLADS works but decided against it. The rationale, as explained by the ministry, is that end-use-based exemptions are difficult to monitor and prone to misuse. Furthermore, granting such an exemption would block the Input Tax Credit (ITC) for suppliers, which could paradoxically increase the overall project cost.

This consistent rationale against ad-hoc exemptions is one of several key ministerial positions that emerged during the session, which are synthesized in the following section.

Distillation of Key Ministerial Stances

Synthesising the detailed answers from the different questions gives a clear summary of the Ministry of Finance;s main policy positions on the most debated GST topics during the Winter Session.

1. On 'GST 2.0' and Rate Rationalization: The government's stance is that the new, simplified structure is a citizen-friendly reform designed to lower the cost of living, stimulate consumption, simplify compliance, and boost economic growth, despite a projected short-term negative revenue impact.
2. On GST Compensation to States: The government holds a firm constitutional position that the five-year compensation period has concluded, and all admissible dues have been settled. There are no current proposals for an alternative compensation mechanism.
3. On Combating Tax Evasion: The ministry's strategy relies heavily on technology and data analytics, deploying measures like biometric authentication, AI-based risk profiling, and nationwide verification drives to identify and prosecute fraudulent registrations and fake billing operations
4. On Expanding the GST Base: The Ministry exhibits a strong preference for maintaining a broad, consistent tax base, resisting sector-specific exemptions (e.g., MPLADS) to prevent revenue leakage and economic distortions, while deferring the inclusion of major revenue sources like petroleum to the collective decision-making of the GST Council[

These key stances collectively signal a policy direction prioritising structural simplification and technology-led enforcement.

Conclusion

The parliamentary discourse on GST during the Winter Session of 2025 marks a clear pivot in the evolution of India's indirect tax regime. Where previous years focused on the foundational challenges of implementation and stabilization, this session’s inquiries reveal a shift toward the next phase: deep structural reform, the recalibration of fiscal federalism, and the maturation of enforcement mechanisms.

The key takeaways from this analysis are the legislature’s intense focus on the macroeconomic impact of GST 2.0, the persistent revenue concerns of states in the post-compensation era, and the government's deepening reliance on technology and data analytics to secure the tax base. The ministerial responses underscore a strategic vision for a simplified, buoyant, and administratively robust GST system. The questions and answers analysed reflect a system moving beyond its inception pains and into a period of significant reform, balancing the ambitious objectives of economic stimulation, revenue stability, and streamlined compliance.