Decision on lottery unlikely in GST meet, real estate rates to be fixed

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The goods and services tax (GST) Council would probably see a tone of dissent on single rate on the two types of lotteries in its meeting on Wednesday the ministerial panel tasked with the job has not arrived at a consensus yet. Government officials, including those belonging to states, said that the decision could be held over. Finalising the tax rate on real estate would be the only major item that would reach fruition in the meeting here in Delhi. The meeting would be held via video conference.

Some state finance ministers, mostly representing the states ruled by the Opposition, are of the opinion that the GST structure for lottery should not be changed in haste, since existing mechanism has been arrived at after detailed deliberations.

“The GoM has to meet and discuss things properly when there are serious differences of opinion among states. I hope sense will prevail,” Kerala Finance Minister Thomas Isaac told Business Standard. He said all options should be carefully considered and a decision on rates concerning such a politically sensitive item should not be taken through video conference. 


Manish Sisodia, finance minister of Delhi, wrote to finance minister Arun Jaitley Tuesday requesting him to postpone the GST Council meeting to ensure decisions of such "crucial nature". He also voiced concern on the decision on real estate being taken without deliberations.

Meanwhile, the GoM on real estate submitted its final recommendations on Monday. The GoM, headed by Gujarat deputy chief minister Nitin Patel, is understood to have recommended lowering of GST rates on under-construction houses from 12 per cent with input tax credit to five per cent without input tax credit. Similarly, it suggested reducing the rate for under-construction affordable houses to three per cent without input tax credit from 8 per cent.

The only condition put on builders would be to buy at least 80 per cent of their inputs from the organised sector, officials said.

The GoM on lottery met on Monday but finance ministers of Kerala and Punjab, two states where lottery has major presence, were not present. While Isaac could not attend due to illness, Punjab FM Manpreet Badal had to present the state budget.


In case of the tax rate on lottery, officials also said that representatives of Maharashtra, Goa and Assam among other states are preferring a single GST rate for both state-organised and state-authorised lottery. The possibility of hiking the GST rate on the former was discussed in the GoM meeting, but there has been no official recommendation on the issue yet.

State organised lottery tickets are taxed at 12 per cent, lower than the 28 per cent incidence on state-authorised lottery. Lobby groups are, too, batting for parity with state lotteries.

“Either the GST on state-authorised lottery ticket be reduced to 12 per cent, or it should be made 28 per cent on the margin money for both both lottery types,” said Snehalkumar Shah, president of Lottery Trade Agent Association of Maharashtra.

Some state officials, saying that the issue of lottery becomes increasingly critical especially on the face of looming elections, declined to comment on the issue of consensus.

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