India’s GST Council Passes Casino Tax Rate Cut to GoM

The demand by the lottery and casino industries in Goa to make a change in the Goods and Services Tax structure has been passed on to a higher power.

The Goods and Services Tax (GST) Council held a meeting last week and decided that they would not be reducing the current tax rate on the gambling industry across states.

The Council has passed the responsibility of making that decision to a Group of Ministers (GoM) which was established in 2018.

The GoM will be responsible for reviewing the request to change the GST and will make a decision on the matter.

The details from the GST Council meeting reveal that the council referred the issue of imposing a uniform rate on lottery tickets back to the GoM headed by Maharashtra Finance Minister Sudhir Mungantiwar. The group was already reviewing what rates should be applicable to lottery tickets.

The GoM already discussed the problem earlier this year but made no headway because they could not reach an agreement on how to apply a uniform tax rate for the lotteries. This was mainly because the state governments of West Bengal and Kerala could not find a common ground. Now, it is the job of the council to get all member states onboard with an agreement. 

Because of the push by the various concerned parties, the GoM has been asked to meet and submit recommendations to the GST Council.

In a statement, Pramod Sawant, Goa’s Chief Minister, said

There was some issue on GST on gross revenue, which has now been handed over to the Group of Ministers for further discussion. It is for the GST council to decide.

GST Woes

The problem that has caused this issue is the wide gap in tax rates for lotteries. Lottery tickets that are sold in the organising state have a 12 percent GST. However, when states authorise private lottery sellers to take the tickets and sell them outside of their organising state, the tax rate jumps up to 28 percent.

According to Kamlesh Vijay, Group CEO of Sugal & Damani, this large tax disparity becomes a tariff barrier. Smaller states like Goa, Sikkim and Arunachal see their lottery ticket sales drop off when they are sold in the bigger states like Kerala or Bengal. This eats into the profits of ticket sellers and results in lower tax revenue.