GST to be raised to 40 percent; Kerala's lottery revenues at risk

THIRUVANANTHAPURAM: After putting Kerala in a financial crisis by reducing borrowing and tax allocation, the Centre is moving towards intervening with lottery revenue as well.

The lottery tax was 12 percent when GST was implemented. In 2020, it was increased to 28 percent. With this, the ticket price increased from Rs 30 to Rs 40 and then to Rs 50. It also affected ticket sales. The move to increase the GST on lottery to 40% follows this. Meanwhile, Kerala is demanding that the lottery be included in the 5 percent tax bracket in the new reform.

It was decided to reduce and revise the GST rates considering the sharp rise in prices in the country. Later, it was decided to impose a very high GST on some items. Lottery is also in this category. The central government wants to move to a simplified tax framework of 5% and 18% with the removal of the current 12% and 28% tax rates. The 40% tax category is being created separately to make up for the tax loss caused by this. GST is currently 28 percent of the lottery ticket price. There is concern that if this is increased to 40%, the ticket price will have to be increased. Experts also point out that this will affect sales.

The central government sees the Kerala Lottery as being categorized as online gaming and gambling. The Chief Minister and the Finance Minister have written to the center against this.

Livelihood of lakhs of people

Lottery sales are the main source of income and the livelihood of lakhs of people. Lottery sales worth about Rs 14,000 crore happen annually. The government earn about Rs 3,000 crore in taxes and Rs 450 crore in profits. Benefits such as medical assistance, post-death family assistance, education assistance, maternity assistance, Karunya, and assistance to the differently-abled are also distributed through this. All this will stop if the lottery business is in crisis.

What the Prime Minister said

In his Independence Day speech, the Prime Minister announced that the GST rates will be revised from Diwali to reduce the burden on the common man. In the explanation given by the Union Finance Ministry, it was clarified that the tax slabs will be reduced from four to two and that a new tax slab of 40% will be created and things like lottery and gambling will be transferred to it. The GST Council will meet on September 3 and 4 to take a decision and call all the Chief Ministers and State Finance Ministers. A final decision will be taken in that.

Lottery is not gambling; it is a social security scheme. The income is used entirely for welfare activities. There will be strong opposition against any measure that will eliminate the state's source of income.'

-KN Balagopal,

Finance Minister