In the 10th January Goods and Services Tax (GST) Council meeting presided by Union Finance Minister Arun Jaitley, the issue of whether to create a uniform tax rate for lotteries reached no common ground and was called off for another time in the future. In the meeting, Jaitley had promised to appoint a Group of Ministers (GoM) to exclusively deal with this issue.
A couple of days ago, the proposed group has been made. The freshly appointed 8-member GoM is headed by Maharashtra’s Finance Minister (FM) Sudhir Mungantiwar along with West Bengal FM Amit Mitra, Kerala FM Thomas Isaac, Assam FM Himanta Biswa Sarma, Punjab FM Manpreet Singh Badal, Goa Panchayat Minister Mauvin Godinho, Karnataka FM Krishna Byre Gowda and Arunachal Tax and Excise Minister Jarkar Gamlin.
Currently the GST rate on lotteries is at 12% for state organized ones and 28% for state-authorized private lottery centres. The 28% tax is of huge concern to the lottery industry and has received furious backlash from people associated with the industry.
The Terms of Reference for the Group states that the panel will look at all the possibilities for creating a uniform tax rate for lotteries. The group would also see whether private companies are misusing the lower rate and illegally making money at the behest of the state.
The GoM will also examine issues cropping out of enforcement of the laws and its overall legal framework. This is expected to prevent tax evasion in lottery business thereby curbing negative social impact of the industry. The GoM will likely submit its report on the implementation of uniform tax in the next GST Council meeting, which hasn’t been announced yet, but it usually takes place every two months.
If the tax rate is lowered and uniformly implemented on lottery, the industry might grow by a huge margin this year. The centre, having cracked down ruthlessly on illegal lottery centres and tax evaders, is extinguishing the bad social impacts which needs to be taken care of at the earliest for the industry to grow.
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