GST from Lotteries – Boosting Revenues of Lottery Friendly States


Not all states in India are lottery-friendly. Though there is no blanket ban on lotteries, there are only 9 states, which allow the sale of lottery tickets. These are Kerala, Goa, Mizoram, Arunachal Pradesh, Sikkim, Assam from the seven sisters from North East, Punjab, Maharashtra and West Bengal. The revenue from the sale of lottery tickets help these state governments in funding many social projects. For example, the Kerala state government provided healthcare benefits to lakhs of low-income families through the proceeds of over INR 4,000 crore worth of international lotteries in the last fiscal year.

Last year, GST (Goods and Services Tax) was introduced in the country post which the nine lottery states together collected nearly INR 3,950 crore as GST. The state of Kerala leads the tally with INR 908 crore of GST and the total state revenue stood at INR 1,691 crore. The interstate sale of lotteries is under 28% tax slab, while the intrastate sales are under 12% as per the current GST structure. The lottery operators pay GST on the face value, including the prize money.

The lottery market is huge in the country with only nine states reporting a revenue of INR 6,000 crore together in the last year. The exact data got to come in light because of GST. Earlier, it was not reported fully. According to the industry estimates, lotteries in India are INR 50,000-crore business.

Seeing the potential of the lottery in the country, the world leader in offering online platforms for international lotteries, Lottoland is planning to come up with a new website in India.  These online platforms enable people to play all major lotteries happening anywhere in the world from the comfort of their homes.

GST has boosted government revenues. Prior to GST being implemented the lottery distributor was just paying 2-3% as VAT and depending on the particular draw a fixed amount as lottery tax. Now, the slabs are specified, and they have to pay accordingly. This is seen as negative by the distributors but for the government, it opened up a lucrative stream of revenue. The problem is more prominent in small states like Goa where most sales happen interstate attracting 28% tax rather than intrastate.

The revenue earned by the government is then utilized in running and funding many social welfare programs. As of now only 9 of the 29 Indian states have lottery schemes floated. If other states join this bandwagon the revenue from it alone is enough to support the government’s ambitious schemes of Ayushman Bharat or providing free education etc. It’s not a fancy statement but many countries have been doing it and it’s a proven model. The lottery revenue is used to support social ventures in many countries across the globe and we can replicate that model here.

As of now, it’s only the state of Kerala that has been able to do it properly. The remaining state governments where the lottery sale is legal, are not able to generate meaningful funds. Most of the profits were pocketed by big distributors in these states who work as cartels. With the introduction of GST, now things are becoming more transparent and helping the governments to get the desired money.

The Kerala government, which was able to tame this menace effectively even prior to the introduction of GST has reached out to help the governments of West Bengal, Punjab, Maharashtra, and Goa. They have offered to become the knowledge partner and train the officers of these states on running the lottery business effectively. All in all, GST has proved to be the revenue booster for lottery friendly states.

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