Winning a lottery is indeed a matter of great fortune. However, in some countries, including India, the government occupies full control over how these lottery winnings are taxed.
So yes, you can participate and play various online Lottery games in India. However, if you are into playing lottery games, you might have known that in India lotteries are taxed as per various acts. Yes, there are taxes and charges, and you might need to pay a certain proportion of it if you hit a lottery!
The Legal Aspects of lotteries in India
It is legal to operate a lottery business and even participate in lottery games in India. However, there are various regulated and unregulated businesses operating around the country. In legal terms, a lottery is an event where people buy tickets to win a payout. There is a general tax rate of around 30% applicable throughout India for lottery winnings, which operates according to the provisions of Section 115BB.
The Slab Rate
It refers to the base total that you need to note down when making it work. It means that you are not allowed to use the benefit of the slab rate on your lottery winnings. Also, it depends on how you earned the funds without performing any commercial activity other than purchasing the ticket.
Application of Surcharge
When you win a lottery, it is likely to attract a Surcharge, if the amount exceeds Rs. 1 Crore. Usually, the surcharge is 15% of the total tax amount that you pay. However, it is mainly for occasions when you earn money out of a lottery. So, the surcharge may apply in applicable cases where there are prospects for it.
EC and SHEC Charges
It is probably the last set of taxes that you might need to spend on. These are Education Cess (EC) and Secondary and Higher Education Cess (SHEC) and totals. These are essential to ensure the proper distribution of educational services around the country.
While EC accounts for nearly 2% of the total taxes and the surcharge you might need to spend, the SHEC accounts for 1% of the total. Hence, you are liable to pay 3% of the total amount on the values of EC and SHEC.
It is also important to note that the taxation rules can be different in different states. Some of the prominent ones include the Delhi Entertainments and Betting tax act 1996, and the Andhra Pradesh Horse racing and Betting Regulation act. The Public Gambling Act, 1857, allows the operation of gambling activities around India, which also includes lottery games. Although this rule is applicable all over India, each state has a different set of rules.
Though it may sound unfair to the one who wins a lottery, taxation on Lottery jackpots is vital to the taxation system of our country. For sure, you will still have a significant portion of your winning, but you can not have the whole amount with you. So, make sure you pay the applicable taxes and do your duty as a responsible citizen!