State lottery: Govt levies 30 pc tax from those winning small prizes multiple times

Alappuzha: The state government has begun levying tax from those who win small prizes several times through lottery draws. A 30 per cent tax deducted at source (TDS) will be levied on those who receive prizes above Rs 10,000 multiple times a year. In the initial phase, tax will be levied from those who arrive at the lottery offices with the winning tickets to redeem prizes. 

The move comes in line with the Centre’s guidelines as per the Income Tax (Amendment) Act, 2023. Earlier, taxes were levied only for prizes above Rs 10,000. However, the union government proposed to implement the new system from April onwards in order to avoid tax evasion by those who receive small gifts multiple times. But, the state government delayed implementation by a month.

At present, the government has not been successful in spotting all those who win lottery draws multiple times to bring them under the tax limits. This can be possible only if Aadhaar is made mandatory for collecting the prizes. 

As of now, Aadhaar is required only for those who visit lottery offices directly to redeem the winning tickets. It is not yet mandatory for those who collect their prizes via lottery agents, thereby posing a challenge for efficient tax collection. 

High chance of irregularities 

According to concerned officials of the sector, chances of irregularities are high in collecting taxes from the winners owing to an order issued by the lottery department itself.  

“When the winning tickets are handed over at the lottery office by the agents, they are only required to fill a voucher stating that they do not have tickets of anyone liable to pay tax. This leads to irregularities,” they said. 

In addition, if the agents refrain from paying taxes to the lottery department even after collecting 30 per cent TDS from the winners, they will not get caught. That is, for efficient levying of taxes, agents must be directed to collect the Aadhaar details of the winners and hand it over to the lottery department.