Lottery tickets to attract maximum GST rates

Betting on your luck is about to get costlier as the Indian government has decided to levy 28%, the maximum possible rate of goods and services tax (GST) on lottery tickets, a business worth Rs 5000 crore.

Up until now, states that allow lotteries have had minimal or zero tax levied on them.

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"The taxation has to be logical," Rahul Tangri, president, Playwin, an electronic lottery provider told ET. "It would be very unfair if the government levies tax on the face value of the lottery."

This face value that Tangri is talking about consists of three parts, the prize money, government taxes and the operators' margin.

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"GST should only be levied on the operators' margin. The prize money part comes under direct tax (income tax paid by the winner)," said Tangri.

If applicable, this 28% tax would impact the revenue of the state governments that either have lotteries or allow licensed agencies to run them on their behalf.

The lottery industry is not openly accepting the move. "Any irrational tax structure would kill the industry," said Kamlesh Vijay, CEO of Sugal & Damani, one of India's largest lottery and gaming operators. "Lottery is a well-regulated industry. It provides direct employment to over 10 lakh people. Higher tax slabs would force lottery companies out of business. It will also spawn a large number of underground, illegal lottery schemes," he said.

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However, one problem that this levy would face is that Indian courts have stated that lotteries are neither goods nor services, so implementing a tax meant for these two is not ideal, as per many states and the lottery business.

(Image source YouTube)