Government is Looking at a Single GST Rate for All Lotteries

The GST Council contemplates keeping a uniform GST rate for all lotteries. Currently, for state lotteries, GST stands at 12%. However, GST for lotteries which are executed by private agencies but authorised by states stands at 28%.

The GST Council is considering a steady GST rate of 28% for all lotteries. The Centre is also considering at levying a ban on online lotteries. The Home Ministry will be taking the final decision.

Before the implementation of GST, the tax incidence of lottery tax and service tax was collectively 6.71% on the face value. However, now, it is almost 28% on the face value, inclusive of the prize money translating into a 300% increase in the tax.

Also, the GST collection via lottery as an estimate must be minimum Rs 12,000 crore for an average GST rate of 20% on the face value. However, a collection of only Rs 3,725 crore has been made during nine months of the Financial Year 2018-19 as per how a query was answered in the Rajya Sabha.

Also Read: Great Expectations for the 37th GST Council Meet

The next GST Council meeting is happening tomorrow at Goa. The Council members are likely to have a fierce debate tomorrow around lotteries considering the fact that states remain divided over the issue.

A GST rate hike could probably harm states like West Bengal; however, several other states are on the side of increasing the GST rate for lotteries. Ten states, inclusive of Kerala, Goa, Andhra Pradesh, and Maharashtra permit lotteries. Many states treat lotteries to be a sin and believe that an increase in the GST rate will demotivate people from buying them.

In July, the matter was referred to Attorney General (AG) KK Venugopal by the GST Council. In the meeting tomorrow, the council will listen to both AG as well as the group of ministers, who are keen on implementing a single rate for lotteries.

For any clarifications/feedback on the topic, please contact the writer at bhavana.pn@cleartax.in