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The lottery business in the country has gone down from approximately ₹60,000 crore to ₹12,000 crore due to inaccurate levying of GST, according to industry players.
One of the main issues is the differential tax treatment on State government-run and State government-authorised lotteries. Currently, 12 per cent GST is being charged on lotteries run by State governments (a lottery that is not allowed to be sold in any State other than the organising State), while the lottery tickets authorised by State governments (a lottery which is authorised to be sold in States other than the organising State also) attract 28 per cent levy.
“The whole point of GST is to have One Nation, One Tax, but this dual taxation on lottery is killing the industry,”, said Kamlesh Vijay, CEO, Sugal and Damani Group. Sugal and Damani is one of the largest marketers of State government-issued lotteries in India. It had in excess 30,000 points of sale (POS), but has now only fewer than 10,000 POS.
Industry players under the banner of All India Federation of Lottery Trade and Allied Industries have approached the Finance Minister seeking a review. The trade body in a letter to the Finance Minister has pitched for a uniform tax rate,
Also, the distinction made between State-run and State-authorised lotteries is misconceived as under the Lotteries (Regulation) Act 1998, no private players can run lotteries and all lotteries are State-run, the industry body said. While the industry leaders have shown willingness to be taxed despite various Supreme Court judgements stating that lottery falls under neither goods nor services, they have shown strong resistance to the taxation pattern being calculated on the face value of the ticket. “There is a huge anomaly in the way lottery tickets are being taxed. If the lottery ticket costs ₹100, GST is being imposed on the face value of ₹100 whereas ideally, tax should not be imposed on the face value but only on the margin after excluding the prize component,”said Vijay.
Lotteries were taxed at six per cent before the implementation of GST, whereas it is now 28 per cent on the face value, including prize money.
The federation has also submitted case studies on how New Zealand, Canada and the UK tax their lottery industry.
The writer is an intern with BusinessLine, Mumbai
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