The GST Council broke its tradition of taking decisions by consensus at its 38th meeting, with a first time vote on a proposal to tax all lotteries at the uniform rate of 28%. After Kerala pushed for a division, States voted 21-7 in favour of the proposal.

Falling revenue

There have been widespread concerns about the shortfall in tax revenue at a time of economic slowdown and lower consumption. In the first eight months of this financial year, only about 50% of Goods and Services Tax collection targets and 60% of compensation cess collection targets have been achieved.

Speaking to journalists as he left the meeting, West Bengal Finance Minister Amit Mitra said that the Centre’s revenue projections indicated that it would run out of money to compensate states by February 2020. He also worried that social sector spending would be cut as a result.

Tax on lotteries

With regard to lotteries, there is a dual rate regime at present, with state-run lotteries taxed at 12%, while state-authorised lotteries (run by private players) face a 28% tax rate.

Maharashtra and Puducherry were among the states who opposed the proposal along with Kerala, concerned about losses to state revenue, sources said. However, the vote went in favour of the proposal and a uniform 28% tax rate on lotteries will come into effect from March 1, 2020.

Source: The Hindu

Relevant for GS Prelims & Mains Paper III; Economics