Playing Lottery is a vice but paying GST on tickets is not!

Playing Lottery is a vice but paying GST on tickets is not!

- By A Tax Professional

Goods & Services Tax (GST) is a headline grabber in India. What recently made it more ‘intaxicating’ was its ‘blending’ with Lottery. And the issue was – Some of the States which run the lottery business to raise funds for welfare schemes wanted to pay lower GST tax rate than the one to be paid by an authorised agency. Though the GST Council headed by the Union Finance Minister settled the issue through a voting process for a uniform tax rate of 28% but taxes on lottery have a long long history and some of the kings had managed to achieve stunning feats with the help of lottery!

The first documented evidence of a lottery was traced from the history of the Chinese Han Dynasty between 205 & 187 BC. Lotteries are believed to have financed the mega government projects like the Great Wall of China.

The Romans used to play with lotteries only as an amusement at dinner parties. Every ticket holder used to be assured of some prizes. Later Augustus Caesar used lottery tickets to raise funds for repairs of the city of Rome.

In brief, lotteries were used an instrument to raise funds for either fortifying the town walls or to help poor like in the Netherlands. When it became a popular source of fund-raising, Emperors also began to levy taxes on sale of lottery tickets. The Dutch state-owned Staatsloterij is the oldest running lottery. The English word lottery is derived from the Dutch noun “lot” meaning “fate”.

The first Italian lottery was held on January 9, 1449 in Milan. It was held by the Golden Ambrosian Republic to fund the war against the Republic of Venice. However, it was in Genoa that Lotto became very popular.

The English had first experimented with Raffles and other games of chance and then moved to lottery which was chartered by Queen Elizabeth I, in the year 1566, and was drawn in 1569.

In modern times, lotteries which were earlier banned by many countries, emerged as a source of tax revenue post Second World War when casino culture became popular. When India drafted its own Constitution, it also included Lottery in the State List II of the 7th Schedule of the Constitution afrer animated debate between some Members and Dr B R Ambedkar.

Now, with 28% tax rate Lottery is going to enrich the revenue kitty of many States which would hopefully raise substantial funds to fund the schemes for the poor in their respective States.

It is true that it is a vice but by buying tickets offline or online, buyers do contribute for a national cause and this is what TIOL Annual National Taxation Awards intend to celebrate – the tax paying behaviour of a common man.

Let’s celebrate the tax-paying behaviour of the common tax payer notwithstanding the fact that playing lottery is an addiction or lottery is a sing good!