Kerala govt opposes Finance Ministry's plan to hike lottery rate to 28%

Kerala has opposed Finance Ministry's plan to increase GST tax rates for lottery to 28 per cent from the present 12 per cent in the state.

Kerala Finance Minister Thomas Isaac said, "It is unfortunate that Jaitleyji wants to raise the GST tax rates in Kerala from 12 to 28 per cent on a par with lottery run by intermediaries. Kerala doesn't sell its lottery tickets outside the state. Therefore, it is a nefarious move to open up Kerala to lottery mafia."

The rate for lottery tickets in Kerala, where the business is run by the state government, has been at 12 per cent, and Isaac has earlier said keeping the rate lower compared to the intermediaries would guard the state from the private firms entering into Kerala. 

The state government has maintained that entry of private firms in the sector would result in fraud, and people losing their money. The lottery business contributes significantly to the Kerala's revenue.

Kerala Lotteries has seen a growth of over 22 per cent in 2017-18, marking a higher growth compared to the previous years. However, the net profit from the lottery sales has grown a meager 0.23 per cent during the year.

The sales has grown to Rs 90.34 billion during the year 2017-18, compared to Rs 73.94 billion during the previous year. 

The sales figures stood at Rs 63.17 billion in 2015-16. 

However, the net profit for the state from lottery sales was at Rs 16.95 billion compared to Rs 16.91 billion during the previous year, with a marginal growth. 

There has been an observation from the Comptroller and Auditor General of India earlier that while the state lotteries consists the major share of the non-tax revenue of the State, the higher expenditure for prizes and others result in a lower net yield.

The State government has recently said that the growth in sales during the fiscal 2017-18 was owing to the changes it has implemented in the period, by reducing the ticket price and changing the prize structure.

The profit during the year 2016-17 was at Rs 16.91 billion, which was a 15.7 per cent growth compared to the profit of Rs 14.61 billion during 2015-16. The proceedings from the lottery sales are deposited in treasury. It also sells lottery under a healthcare scheme for which the budget allocation is for Karunya Benevolent Fund.

Kerala State lotteries hadn't made loss since its inception, says the lottery department officials. In 1967, on the year of its inception, the total revenue from lottery sales was only Rs 2 million which witnessed an increase to reach Rs 6.25 billion in 2009- 2010.