GST Council fixes 28% uniform rate for lottery, no rate hike
19 December 2019
The Goods and Services Tax Council at its meeting on Wednesday decided to have a uniform tax rate of 28 per cent for all sorts of lotteries. The decision was taken through voting in which 21 states voted in favour while seven states and union territories voted against.
This change will become effective from 1 March 2020.
The GST Council, which met on Wednesday for the 38th time, however, did not take any decision on increasing tax rate on any goods or services despite concerns about the dip in overall collection.
Lotteries are currently taxed on duel rate – while state-run lotteries are taxed at 12 per cent, private lotteries authorised by state governments are taxed at 28 per cent.
“Every attempt was made to keep the tradition alive, but eventually the council was reminded that the rules allowed [voting] and that tradition was not part of the rules. After taking sense of house, we went ahead with voting,” finance minister Nirmala Sithraman said.
The GST Council recommended exemption of upfront amount payable for long term lease of industrial/financial infrastructure plots by an entity having 20 per cent or more ownership of central or state government. At present, the exemption is available to an entity having 50 per cent or more ownership of central or state government. This change shall become effective from 1 January 2020.
The Council also considered a uniform rate of GST on woven and non-woven bags and sacks of polyethylene or polypropylene strips or the like, whether or not laminated, of a kind used for packing of goods (HS code 3923/6305) in view of the requests received post the changes recommended on such goods at the last meeting and recommended to raise the GST to a uniform rate of 18 per cent (from 12 per cent) on all such bags falling under HS 3923/6305 (including flexible intermediate bulk containers - FIBC). This change shall become effective from 1 January 2020.
The meeting deliberated upon the current position of revenue collection and the various options, including raising rates on some luxury items. However, no decision was taken. Detailed data were shared with states and they were asked to come with suggestions for the next GST Council meeting.
GST Council gave necessary guidance on further analysis regarding exemption and concession impact analysis, tax base analysis, sensitivity analysis and compliance measures needed to keep pace with revenue needs. The Council also directed for expeditious implementation of IT and other initiatives.
Meanwhile, opposition-ruled states were critical of the present status of the GST. West Bengal finance minister Amit Mitra said that the centre’s projection made it appear that there will be no money left for compensation cess after February.
The meeting was attended by chief ministers of Goa, Haryana and Puducherry, deputy chief ministers of Arunachal Pradesh, Bihar, Delhi, Tamil Nadu and Tripura as well as 17 finance ministers/ministers representing their states and senior officials from the central and state governments.