1. Goods and Services Tax (GST) is levied on supply of goods or services. Does lottery come in the purview of GST? Does it fulfill definition of Goods and Services as defined by GST? Does it fulfill definition of supply under GST?

2. When we define “goods” in GST, it says “goods” include every kind of movable property, actionable claims, growing crops, grass and things attached to or forming part of the land which are agreed to be severed before supply or under a contract of supply.

3. Lottery is an actionable claim and as per above definition, actionable claims are included in definition of “goods”. Now, what about supply? Going deeper in the law, Schedule III read with Section 7 of the CGST/SGST Act lists the activities or transactions which shall be treated neither as supply of goods nor supply of services. Para 6 of this Schedule specifies actionable claims other than lottery, betting and gambling as one of such transactions that shall not be treated as supply. There are two kinds of lotteries:

1. Lottery run by state government
2. Lottery authorized by state government

Lottery run by State Government

The lotteries that are run by State Government are chargeable at the rate of 12%. Since the supplier of such goods is government, these supply are also notified as Reverse Charge Supplies. When the Government supplies the lotteries to the lottery distributor or selling agent, the agent needs to make the GST payment of that supply to Government under Reverse Charge Mechanism (RCM).

When the selling agent or distributor supplies the tickets to the local agents, such supply shall be treated as exempt if the distributor has paid GST on the transaction when supplied by the Government.

4. Lottery authorized by State Government

In case of the lotteries that are authorized by State Government, the GST rate chargeable is 28%. The basic difference here is not only the rate but also the mechanism of payment of tax. Tax here is paid under Normal Charge when the lottery tickets are distributed by lottery distributor to local agent. When further the local agents distribute the tickets (make supply), GST needs to be paid by them under Normal Charge, no exemption is given in this case. All the distributors and local agents are liable to take GST registration and make the GST payment if the lottery is authorized by Government.