Definitions of Goods under GST
Supply of lottery has been treated as supply of “goods” under the Central Goods and Services Tax (CGST) Act, 2017.
Section 2 (52) of the Act defines “goods” to include ‘actionable claims’ like lotteries. An ‘actionable claims’ is a claim to debt by means other than mortgage or hypothecation of property. Hence, lotteries, despite being actionable claims, can be taxed as ‘goods’ under the act.
From the constitutional amendment act (101st) of 2017 to include actionable claims within the meaning of Goods in order to make lottery fall within the scope of the GST ACT.
Problem is arising that lottery is defined as goods but code allotted for lottery is under services, the assesses are not able to upload return or deposit tax in time.
Rate of GST
single rate of GST @ 28% on both State run and State authorized lottery was fixed which would be effective from 1st March, 2020.
PAYMENT OF TAX UNDER REVERSE CHARGE
In the case of lottery run by State Government, the tickets are sold by the State Government to lottery distributor /selling agent. The selling agent is required to pay tax under reverse charge.
Subsequently, when the selling agent supplies such tickets to sub-agent, no tax is required to be paid. The local sub-agent is also not required to pay any tax. Thus, a tax is levied at single – point under reverse charge in case of lottery run by State Government.
However, in the case of lottery authorised by State Government, the tax is to be paid under the forward charge by the lottery selling agent (i.e. supplier). A tax must also be paid at each stage of supply.
| Lottery run by State Government | 1.Tickets sold by State Government. 2. Lottery distributor must pay tax on reverse charge at the time of procurement of tickets from the Government. 3. No tax required to be paid further when sold to sub-agent / customer, if a tax is paid by a distributor. 4. Sub-agents not required to register under GST |
| Lottery authorised by State Government | 1. Tax paid under the charge by the supplier of lottery tickets. 2. The tax must be paid at each point of supply under normal charge. When selling agent sells tickets to sub-agent, he must pay GST. 3. Sub-agents must register under GST and pay tax. |
INVOICING REQUIREMENTS
Supply of lottery tickets must be under the cover of tax invoice containing all particulars required in an invoice. The invoice is required to be issued with the sale of a lottery ticket. There is no relaxation in invoicing requirements for a supplier of lottery tickets.
TIME OF SUPPLY
The time of supply of lottery tickets shall be earlier of the following dates:
- Date of issue of invoice or last date when the supplier is required to issue an invoice.
- Date on which supplier receives the payment for supply.
When a person pays the amount to participate in a lottery or to buy the lottery ticket, the amount of money paid to participate is treated as payment for supply.
DETERMINATION OF PLACE OF SUPPLY
Lottery run by State Government is always an intra-state supply. The place of supply will always be the State which runs the lottery game. This is because such a lottery scheme is always conducted within the State.
Lottery authorised by the State Government but conducted by agencies can be an interstate or intra-state supply. The place of supply will have to be determined as under:
- When supply involves the movement of goods: The place of supply shall be the location of goods at the time at which movement of goods terminates for delivery to the recipient.
- When supply does not involve the movement of goods: The place of supply shall be the location of goods at the time of delivery to the recipient.