GST Council Votes to Change Lottery Slab to Flat 28 Per Cent
The 38th meeting of the Goods and Services Tax (GST) council on Wednesday saw a new practice to reach a decision on taxation of state and authorised lotteries. The states, for the first time, voted on the matter, 💞as there were wide differences over whether there should be a single rate or dual rates on💜 lottery. Generally, the council takes consensus-based decisions on such matters.
Earlier, as per the GST Act, two rates were prescribed—12% tax on lottery tickets sold by a state government within the s⭕tate, and 28% tax on lottery tickets sold by other authorised lotteries (e.g. State lottery tickets sold outside the state’s jurisdictions), .
“The council has decided to impose a single rate of 28% on state-run and authorised lottery,” said Union Finance Minisꩲter Nirmala Sitharaman after the council meeting.
𒊎The council, for the first time, moved away from the tradit𝕴ional practice of consensus-based decision making that has been followed in the past 37 meetings of the council.
Sitharaman said, “every attempt was made to keep the set tradition alive … Every attempt was made to convince … But, eventually the council was reminded that the rules allow (for voting) and that tradit𒅌ion is not part of the rule book. I took the sense of the house … and we went ahead with the decision to have a vote. So, it is not enforced by the council, or by me as the chair.”
On the matter, 21 states voted in favour of a single rate of 28% tax on lotteries, while 7 states voted against it, as per an offic𝕴ial.
“For the success of GST, it’s important that the Centre and states work together and take decisions with consensus as they have been doing till now,” said Pratik Jain, lea🅠der of indirect taxes at PwC.
Tax experts say that hopefully the council continue to take consensus-based decisions൲ in the fut🉐ure and that voting on Wednesday was an exception.
Revenue secret🐼ary Ajay Bhushan Pandey said that a single rate of GST of 28% will apply on lottery from March 1, 2020. This tax will be charged on the face value of the lottery tickets of state and authorised lotteries. The face value of lottery tickets includes the prize money distributed to the winners and margins of agents,ℱ retailers and distributors.
In a meeting three months ago, the (GoM) headed Maharashtra Finance Minister Sudhir Mungantওiwar to review the issue of setting a uniform rate on lottery tickets and to get all the members on board with a unanimous decision. There were oppositions on the unified tax rate from the West Bengal and Kerala governments.
Earlier this year, on lottery sold by state-run and other state l෴otteries. It urged the Central government to withdraw the move to bring in a unified raꦍte of GST.
As per lottery distribution conglomerate and inꦡdustry veterans, 28% tax on lottery sold by distributors and 12% tax on lottery sold by state governments had crippled the lottery industry and had led to a reduction in terminals and sale of lottery by 70%.
sold by the state and other authorised distributors. However, they suggested a tax of 5% to be levied on the face value of lottery tickets (including prize money for winners) or a tax of 28% to be levied on the differꦰence between the MRP and prize payout.
As per Wednesday’s GST council voting, both State-run and pr💟ivate lottery distributors will now pay the same and the highest slab of GST rate of 28%.
