State governments and the lottery industry had represented to the GST Council on the issue earlier and it had set up a group of ministers to examine this. 

NEW DELHI: The Goods and Services Tax Council are likely to consider reducing the tax rate on machine-made matchsticks to 12% and outdoor catering to 5% at its meeting on Friday, from 18% for both at present. 

The council will also consider a proposal for tax cuts on some defence equipment, a senior official with a state government said. A committee on the information technology backbone for GST will make a detailed presentation before the council. 

Among other suggestions, it may propose a two-year moratorium on filing of annual returns for businesses with less than Rs 2 crore turnover. 

The state government official said differential rates between outdoor catering and restaurant services that are taxed at 5% had been an issue for some time. Differential rates between handmade and machine-made matchsticks had also been raised time and again by the industry, the official said. Handmade match sticks attract tax at 5%. “Both these need to be corrected,” the official said. The council is also expected to take up the issue of differential tax rates on the lottery. 

Under the GST Act, there are two rates prescribed on the sale of lottery tickets — 12% if the lotteries are sold within the same state, and 28% if a state sells its lottery tickets outside its jurisdiction. The tax is levied on the face value of the lottery tickets, inclusive of the prize money to be distributed to the winners, margin of agents, retailers, and distributors. 

State governments and the lottery industry had represented to the GST Council on the issue earlier and it had set up a group of ministers to examine this. The council, which had considered the matter in its July meeting, had then referred it to the attorney general for his view. 

Courtesy: economictimes