Service tax on Games of chance service (Services of promoting, marketing or organizing of games of chance, including lottery.)
It is proposed to insert clause (zzzzn)in Section 65(105) of the Finance Act,1994(as amended from time to time)[hereinafter referred to as “the Act”] so as to define taxable service as “any service provided or to be provided to any person, by any other person, for promotion, marketing, organizing or in any other manner assisting in organising games of chance, including lottery, Bingo or Lotto, in whatever form or by whatever name called , whether or not conducted through internet or electronic networks”
The words “game of chance”, “lottery”, “Bingo”, “Lotto” have not been defined by the Act. Therefore, these words should be understood in their popular connotations as under:
Game of Chance– The following definition of ‘game of chance’ as given by www.answers.com may be noted:
- “A game of chance is a game whose outcome is strongly influenced by some randomizing device, and upon which contestants may or may not wager money or anything of monetary value. Common devices used include dice, spinning tops, playing cards, roulette wheels or numbered balls drawn from a container.Any game of chance that involves anything of monetary value is gambling. Thus, every gamble is a game of chance, but not every game of chance is a gamble.
Some games of chance may also involve a certain degree of skill. This is especially true where the player or players have decisions to make based upon previous or incomplete knowledge, such as poker and blackjack. The distinction between ‘chance’ and ‘skill’ is relevant as in some countries chance games are illegal or at least regulated, where skill games are not.”
Lotteries- Lotteries are conducted by various State Governments and are regulated by a Central legislation, i.e. the Lotteries (Regulation) Act, 1998. The said Act provides the conditions, restrictions and prohibitions pertaining to organization of lotteries conducted by the State Governments. Section 4 of the said Act enjoins upon the State Governments to print lottery tickets bearing the imprint and the logo to ensure authenticity of the lottery ticket. It also provides that ‘the State Government shall sell tickets either itself or through distributors or selling agents’.
The State Governments appoint distributors to advertise, promote and sell lottery tickets. Besides the State Governments organizing lotteries, some other games of chance are also being organized.
Bingo- The following definitions given by www.answers.com may be noted:
- “game of chance in which each player has one or more cards printed with differently numbered squares on which to place markers when the respective numbers are drawn and announced by a caller. The first player to mark a complete row of numbers is the winner.”
Lotto- The following definitions given by www.answers.com may be noted:
1. A game of chance similar to bingo.
2. A lottery, typically with an accumulating jackpot, in which participants play numbers of their choice in a random drawing.
The services provided for promotion or marketing or organizing such games of chance are now being covered by introducing a separate taxable service to cover the services in connection with games of chance, organized conducted or promoted by the client, in whatever form or by whatever name called (such as lottery, lotto) under the ‘Games of chance’ service. The tax would be applicable also to such games conducted online. Consequently, the Explanation appearing under ‘Business Auxiliary Service’ is being deleted.
