The Goods and Services Tax (GST) Council in India has finally agreed to set a flat rate for the lottery tax. The decision was made last Wednesday and the new tax will be set at 28% on all lottery tickets that are being distributed by licensed operators and agencies.
It has been a long few months in India, spent on debating how this tax should work. Several factions wanted to change the tax. The Council decided to offer two tax rates, one for state lotteries (12%) and one for private distributors (28%).
Many disagreed with that decision despite the fact that the High Court in Calcutta considered it legitimate.
Operators urged the Court to set a single rate, but GST refused this proposal. Even some of the Council members disagreed with such a course of action, but in the end, all of them come around realizing that this was the sensible way to do it.
The lotteries in India haven’t been faring well this year. The profits declined, so even the Council realized that imposing a heavy tax would further cripple the industry.
Bihar Deputy Chief Minister Sushil Kumar Modi, one of those who supported moderate taxes, stated:
“Till GST revenue doesn’t stabilize, we can’t think of decreasing the rates. In fact, there is no possibility of change in slabs and tax rates in the near future.”
Union Finance Minister Nirmala Sitharaman explained:
“The council has decided to impose a single rate of 28% on a state-run and authorized lottery.”
For now, this will be the effective tax rate, until the lottery business gets back on track or until some other Council member decide to change it.