Lotteries are common in every country. In India, there are both state-run and private lotteries. The GST on lottery sales depends on the type of lottery, i.e., the organisation running the sale. The GST Council had made some important decisions regarding the applicability of GST on lottery tickets in the 31st GST Council Meeting. Based on that, here’s a detailed analysis of GST impacts on the sales and price of lottery tickets in India.
Is GST Applicable on Lotteries?
Lottery Tickets are treated as ‘Goods’ under the Goods & Services Tax. However, it is also an ‘actionable claim’, which is protected by the negative list-schedule III of the CGST Act, which means it is outside the GST ambit. But again, the sale of lottery tickets is an exception to schedule III. Hence, it is taxable under GST as the supply of taxable goods.
GST is a consumption-based tax which is charged on the value of supply. In the case of lottery tickets, the value of supply would be either the Face value of the ticket or the Price notified by the organising company, whichever is higher. GST is already included in this price.
A registered seller of lottery tickets must provide GST tax invoice, clearly mentioning the GST details and the actual price, with each sale of lottery tickets.
Since state-run lotteries are always conducted within a single state, these are treated as intra-state supplies and the GST is charged accordingly. In the case of private-run lotteries, the place of supply would be the same as the location of the recipient. Depending on whether it is inter-state of intra-state, the GST is levied accordingly.
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GST Rate on the sale of Lottery Tickets
Like I said, the rate of GST on lottery sales depend on the type of lottery provider, as follows:
- GST rate on lotteries run by State Governments – 12%
- GST rate on lotteries authorised by State and run by private companies – 28%
Payment of GST on Lottery Tickets
The tax payment mechanism in case of supply of the lottery tickets is also different for state-run and private-run lotteries.
For State-run lotteries, the tax is paid on a reverse charge basis by the selling agent who purchases tickets from the government. Sub-agents, if any, are not required to pay tax on the supply of tickets. Thus, GST is paid at single-point in case of state-run lotteries.
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For private-run lotteries, the tax is paid by the seller (lottery ticket supplier) under the forward charge. Each sub-agent is also required to pay GST under normal charge. Hence, GST is paid at each point of supply in case of private-run lotteries.
The amount won from a Lottery is taxable under the head ‘income from other sources’ of the income tax act.
