The Finance Ministry has come up with an optional composition scheme for service tax payment on promotion or marketing of lotteries. Budget 2010-11 had introduced service tax levy on the services of promoting, marketing, or organising of games of chance, including lottery.
Service tax- Under the composition scheme, a distributor or lottery selling agent who is liable to pay service tax, can opt to pay flat service tax of Rs 6,000 on every Rs 10 lakh of aggregate face value of lottery tickets printed by the organising State for a draw. This rate will apply in those lottery schemes where the guaranteed prize payout is more than 80 per cent, the Finance Ministry has said.
Prize payout- For lottery schemes where the guaranteed prize payout is less than 80 per cent, a distributor or selling agent will have to pay service tax of Rs 9,000 on every Rs 10 lakh of aggregate face value of lottery tickets printed by the organising State for a draw.
One month time-The Finance Ministry has stipulated that a distributor or selling agent of lotteries should decide on the option within one month of the beginning of each financial year. Once opted for a composition scheme, it cannot be withdrawn during the remaining period of the financial year. Lotteries in India are conducted by various State Governments, and are regulated by a central legislation — Lotteries (Regulation) Act 1998.
