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India's lottery industry worried over GST, but it is not the only problem

Centre is also mulling over banning online lottery.

September 19, 2019 / 01:48 PM IST
Representative Image

Representative Image

The 37th GST council meet is set to take place in Goa on September 20. Once again, the single tax rate for lottery tickets will be discussed.

However, the main issue for the lottery industry is the amount of taxable value for calculating GST on lottery.

What does this mean?

The lottery industry is urging the government not to impose tax on the face value of the lottery ticket.

“It should be imposed on face value, minus the prize payout and the balance amount should be taxed. This is followed internationally,” said Kamlesh Vijay, the Group CEO of Sugal & Damani - one of the largest marketers of state government issued lotteries in India.


But, there are more troubles for the lottery industry than just GST.

Centre is also mulling over a possible ban of online lottery.

If online lottery is banned, what will be the scenario?

Banning of online lottery will mean more usage of paper lotteries. Then, there will be issues of controlling inventory and printing.

"Back in the old days, there used to be reports that a large number of illegal tickets were being printed,” said Vijay.

Plus, online lottery is controlled by the state government.

“Online lottery means it is a retailer assisted lottery ticket being sold at the retailer but controlled through a central server by the concerned state government. So, there is transparency when it comes to online lottery,” Vijay added.

He also said that there was a Supreme Court order that let the states decide to allow or ban any type of lottery.

Benefits of online lottery

Even a report by a study group constituted to study the online lottery system detailed the benefits of online lottery. These include ascertaining the total number of tickets sold on a real time basis, access to all data like tickets sold, the prizes declared to the government, among others.

Vijay said that the Ministry of Home Affairs had recommended that lottery should be online only.

But, the ministerial panel led by Maharashtra Finance Minister Sudhir Mungantiwar (recommendations of the panel will be discussed in the GST Council meet) has said that banning of online lotteries led to the increase in tax revenues of Kerala and West Bengal.

Throwing more light on this observation, Vijay said that both Kerala and West Bengal allowed paper lotteries only. And, as there is less control on paper lotteries, they are being smuggled in other states like Karnataka, Tamil Nadu, Andhra Pradesh, Bihar, Jharkhand.

He also added, “Of it is online lottery it cannot be sold outside Kerala and West Bengal because of geo-blocking and the complete trail is available.”

A sin product?

But, why is lottery considered as a sin product in India when many countries globally are using lottery to their benefit?

It is because lotteries ran without law for many years in India.

While lotteries have been there since 1969 in India, the Lottery Regulation Act came only in 1998.

“Most of the lotteries that were banned were before 1998. The Act has come after 30 years and the rule that came in 2010 (Lotteries (Regulation) Rules) has come after 12 years,” said Vijay.

While the perception about the lottery is not that great, Vijay is confident that it will change because most of the countries like China, Australia, the UK and Singapore are earning a lot of money through lotteries, and they are spending this money on the development of sports.

“The entire Olympic team of the UK is being funded by the lottery money. And they are number two in terms of Olympic Games. And China, it is the largest as they are spending USD seven billion dollars using lottery money. Australia has also decided that their Olympic team will be supported by the lottery money. Lottery if regulated can do wonders,” said Vijay.
Maryam Farooqui
Tags: #Economy
first published: Sep 19, 2019 01:48 pm

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