The government is learnt to have turned down the suggestion of some states for reduction in the Goods and Service Tax (GST) rate levied on the lottery business, which has shrunk post imposition of the indirect tax. GST rate on lottery run by state government is 12 per cent, whereas the rate on lottery “authorised” by the state government is 28 per cent. While the former is run within a state by state-owned agencies, the latter is run by private players and can be sold in states other than the organising states as well.
The higher GST rate has adversely impacted the lottery business in many states. States including Arunachal Pradesh, Goa, Mizoram, Nagaland and Sikkim have told the Centre that the lottery business has slowed down after the implementation of GST on lotteries. “The request for reduction in GST rate on lottery has not been acceded to by the government,” according to finance ministry sources.
Lotteries are allowed in 14 states including West Bengal, Maharashtra, Arunachal Pradesh, Goa, Mizoram, Nagaland and Sikkim among others. Prior to the introduction of the GST, the government used to impose service tax only on the agent’s commission, which was around 10-12 per cent of the ticket price. In the new indirect tax regime, the GST is levied on the face value of the lottery ticket at 12-28 per cent.
Sources said the new GST rates on lotteries were notified by the central government on recommendations of the GST Council and any change in these rates would require the backing of the Council. States including Kerala, Punjab has told the central government that it does not appear that GST has made any impact on the sale of lottery tickets. Ticket sales in West Bengal has reduced.
While Arunachal Pradesh, Goa, Mizoram, Nagaland and Sikkim have reported that lottery business has slowed down after the implementation of GST on lotteries, Maharashtra has reported that sale volume of Maharashtra State Lottery has increased, sources said. Number of draws of lotteries organised by other states such as Mizoram, Sikkim, Goa, Arunachal Pradesh and Nagaland in Maharashtra has also increased the after implementation of GST, they said.
Kerala also has reported that there is no decrease in the sales of or revenue collection from Kerala State paper lotteries after the rollout of the new indirect tax regime from July 1 last year. West Bengal has reported that there is no reduction in the number of draws of West Bengal Lottery after the implementation of GST, though the ticket sale figures are reported to have reduced, they said.
The reason Maharashtra has sustained lottery sales volume is because the state is learnt to have increased the numbers of online draws and redesigned the lottery schemes. Arunachal Pradesh, Goa, Kerala, Nagaland and Sikkim have also reported to have made constant changes in consultation with the distributors in the lottery schemes and have also launched new lottery schemes to revive the lottery business.
The GST rates for state authorised and state run lottery were fixed by the GST Council in June last year. As per official estimates, before the GST rollout, states used to collect about Rs 450 crore annually as lottery tax and the approximate turnover (face value) of the lottery trade was Rs 59,621 crore.
The GST regime, which was implemented from July 1, has tax slabs of 0, 5, 12, 18 and 28 per cent. Additional cess ranging from 1 to 290 per cent is levied over and above the highest tax rate of 28 per cent on sin and luxury goods such as tobacco, cigarettes and luxury cars. The amount collected through cess flows into compensation fund, which is used to compensate states for revenue losses on account of implementation of GST. The GST Council had undertaken a rate rationalisation exercise in November by cutting rates on over 200 items, retaining only 50 items in the 28 per cent tax slab.