One nation one tax! Will GST council end dual tax rates on lotteries

GST Council Meeting: Several sectors such as automobile, biscuit manufacturers, cement companies, lottery traders have sought relief from the council.

Kalki Bhagwan, Sri Bhagwan, Chittoor, Oneness University, Yoga Guru, Wellness Guru Income Tax Raid
The income tax department detected undeclared income of over Rs 5,00 crore.

GST Council: All eyes are on the GST council’s crucial meeting scheduled for Friday. The meeting that will be chaired by finance minister Nirmala Sitharaman is expected to take up a range of issues to shore up the economy while maintaining the tax collection estimates. A slowing economy and demands for tax cuts from different sectors of the economy have made it difficult for the apex decision making body to accommodate all of them. One of the demands that the council may take up on Friday is about having a single rate of GST on the sale of lottery tickets. The industry body representing the lottery and other allied activities has also sought a change in the formula that includes prize money while calculating the tax liability. Under the present mechanism, if a state authorised lottery is sold in the same state then it is taxed at 12%, however, if it is sold outside the state then it is taxed at 28%, said Kamlesh Vijay, vice president of all India federation of lottery trade and allied industries.

“If Arunachal Pradesh government is selling its lotteries in Kerala then it is taxed at 28%. If Arunachal government sells its lotteries within the state then it is taxed at 12%,” said Kamlesh Vijay adding that this is why the present tax system is discriminatory.

“If Kerala is selling lotteries then it cannot stop other states from selling lottery in the state, the only difference is that they will be taxed at 28%. This dual tax system is not there in any other category,” he told Financial Express Online.

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In January this year, the GST Council constituted an eight-member Group of Ministers under Maharashtra Finance Minister Sudhir Mungantiwar, the Finance Ministry said in a statement.

West Bengal Finance Minister Amit Mitra, Kerala Finance Minister Thomas Isaac, Assam Finance Minister Himanta Biswa Sarma, Punjab Finance Minister Manpreet Singh Badal, Goa Panchayat Minister Mauvin Godinho, Karnataka Finance Minister Krishna Byre Gowda, Arunachal Tax and Excise Minister Jarkar Gamlin were other members of the committee. The Union government also sought the opinion of the attorney general as finding a solution to the two tax rates under the GST was complicated by competing demands of the affected states.

Kerala has staunchly opposed the move to impose a single uniform GST rate on the sale of lottery tickets. In fact, the Kerala assembly unanimously adopted a resolution in June this year against the Centre’s move to have a uniform GST rate on the sale of lottery tickets.

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Kerala runs several lotteries like Karunaya, Tiruvonam Bumper, Akshaya and other Onam specials while other states like Arunachal Pradesh and Goa have lotteries like Ganapati Bumper and Rajshree, respectively.

The industry body is also pressing for the exclusion of prize amount from the price of the ticket while determining the tax liability.

“Imposing GST on the face value is conceptually flawed; GST is collected from any supply of goods or services for a consideration, however, international VAT jurisdictions do not consider prize money as consideration under GST,” the industry body said in a representation made to the finance minister on Wednesday.

According to sources, the Centre was mulling to impose a uniform tax at the rate of 28% as the businesses of lottery is equated with gambling that requires discouragement. Nearly 10 states in the country allow lotteries and it forms a significant chunk of their revenue. Kerala also earns significant revenue from the sale of lottery tickets.

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“It is a perception problem that is why the tax is being imposed on the face value of the ticket and prize money is also taxed,” Kamlesh Vijay of Sugal and Damani told Financial Express Online.

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