A Group of Ministers (GoM) on issues related to lottery under goods and services tax (GST) regime met on Monday and favoured a uniform tax rate of either 18 per cent or 28 per cent from the current rate of 12 per cent for state-run lottery or 28 per cent for state-authorised lottery.
The GoM may present its report in the upcoming GST Council meeting slated for Wednesday though the Council is expected to give precedence to discussion on lower tax rates for under-construction residential housing, officials said.
The Group of Ministers (GoM), under Gujarat Deputy Chief Minister Nitin Patel, set up last month to analyse tax rates and challenges being faced by the real estate sector under the GST regime is leaning in favour of lower rates for under-construction residential properties. The panel has favoured lowering the GST rate on under construction residential properties to 5 per cent (without input tax credit) from the present effective rate of 12 per cent with input tax credit (after abatement of land) and for affordable housing to 3 per cent from the current rate of 8 per cent.
The effective pre-GST tax incidence on such housing property was 15-18 per cent. GST, however, is not levied on buyers of real estate properties for which completion certificate has been issued at the time of sale. There have been complaints that builders are not passing on the ITC benefit to consumers by way of reduction in price of the property after the rollout of the GST.
“The issue of taxation on residential housing will be discussed first in the Council meeting. The discussion on lottery is not final yet as some states have flagged concerns of evasion with changes in taxation on lottery, especially ahead of the upcoming elections,” an official said. On Monday, the eight-member Group of Ministers under Maharashtra Finance Minister Sudhir Mungantiwar, favoured hiking GST rate on the state-run lottery to either 18 per cent or 28 per cent, while the GST rate on state-authorised lottery would be retained at 28 per cent or brought down to 18 per cent.
Kerala government had earlier opposed the Centre’s move to increase GST rates for lottery and doing away with the distinction between lotteries run by the state and by private firms. Kerala’s Finance Minister Thomas Isaac did not attend the ministerial meeting held on Monday on medical grounds, while Punjab’s Finance Minister Manpreet Singh Badal was not present in view of the presentation of the state budget in Punjab Assembly.
The other members of the ministerial panel include West Bengal Finance Minister Amit Mitra, Assam Finance Minister Himanta Biswa Sarma, Goa Panchayat Minister Mauvin Godinho, Karnataka Finance Minister Krishna Byre Gowda, Arunachal Tax and Excise Minister Jarkar Gamlin.
The ministerial panel was set up last month to suggest whether a uniform tax rate should be imposed on lotteries or the current differential tax rate system be continued. The GoM was also tasked to suggest whether private persons authorised by the states were misusing the lower rate and getting enriched themselves at the cost of the state and suggest measures to curb it. It was also mandated to examine issues related to enforcement including the legal framework, so as to prevent evasion of tax on lottery and suggest appropriate tax rate to address the problem. The 33rd GST Council meeting is scheduled to be held on Wednesday via videoconferencing.