GST on Lotteries and Game Shows.

In this day and age, if one was to say that he/she isn’t familiar with Kaun banega Crorepati (KBC), he/she would be on the receiving end of death stares. But for those who live under a rock, I shall fill you in. KBC is the Indian version of the United Kingdom game show ‘Who Wants to Be a Millionare?’ Our game show is currently in its 9th season and hosted by Amitabh Bacchhan.

It is one of the sensible things on Indian television right now, really (most other T.V series are appalling). Amitabh Bacchhan can engage not only the contestant on the hot seat but also the people who are glued to their T.V screens. And you get to learn! It’s genius if you ask me. The only dampener is the tax the contestants have to pay on winning.

Direct and Indirect Tax

When someone wins on an Online/T.V game show, the winner shall pay Direct Tax at the flat rate of 30% on the income so generated. After adding cess, the tax rate will amount to 30.9%. No Indirect tax shall not be levied on winnings from a game show whether played online or on T.V.

GST Rates:

Supply of lottery has been treated as supply of goods under the Central Goods and Services Tax. The rate on state-run lottery will be 12 per cent while government-authorized private lottery will draw 28 per cent tax on the face value of lottery. Online skill games, which do not fall within the ambit of gambling fall within the category of ‘all other services not specified elsewhere’ and are subject to 18% GST rate.

Industry Impact

(Jaldi kijiye deviyo aur sajjano, keval 1 minute reh gaya hain)

The 28 per cent GST imposed on face value of lottery has adversely impacted the online lottery business. It is significantly higher than the minimal or zero tax levied by the states that have lotteries. The online skills game were earlier taxed at 15%. With the Input Credit Mechanism now available, the 18% GST isn’t an extreme hike.

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. The online lottery business generates employment for a large number of people in the state and provides sustained livelihood to economically weaker sections of the population like widows, differently abled, handicapped and uneducated people. At a protest held against the 28% tax, the protesters demanded that GST should be levied only on margin money i.e. the price of the lottery ticket minus payouts.

In the Council meetings held since the protest, there has been no discussion regarding reduction of the tax rate for lotteries and other gaming activities. We can only wait till the next Council meeting to see whether the issue is tabled or not.