Budget brings lottery sellers under service tax ambit

The lottery tickets may get expensive as Finance Minister Arun Jaitley in the Budget today proposed to remove service tax exemption given to the sellers and distributors of such items.
The Union Budget for 2015-16, presented by Jaitley in the Parliament today, has proposed withdrawal of service tax exemption on "selling or marketing agent of lottery ticket to a distributor".
As per the Budget documents, "the intention in law has been to levy Service Tax on the services provided by... distributors or selling agents of lottery".
In this regard, the "consideration for service would include... Amount retained by the distributor or selling agent of lottery from gross sale amount of lottery ticket, or, as the case may be, the discount received, that is the difference in the face value of lottery ticket and the price at which the distributor or selling agent gets such tickets."

The service tax rate itself has been proposed to be increased from 12.34 per cent to 14 per cent, after subsuming the Education Cess and Secondary and Higher Education Cess.
The Budget also proposes that in respect of the service provided by lottery distributor and selling agent, the service provider has been allowed to pay service tax at an alternative rate subject to certain conditions prescribed under the Service Tax Rules.

Consequent to the upward revision in Service Tax rate, the said alternative rates shall also be revised proportionately. Amendments to this effect have been proposed in the Service Tax Rules. These amendments shall come into effect as and when the new service tax rate comes into effect.

The Budget also proposes that services provided by "agents of lottery distributor are being brought under reverse charge consequent to withdrawal of the exemption on such services".
"In respect of sub-agents of lottery, Service Tax shall be paid by the distributor or selling agent of lottery. This change will come into effect from April 1, 2015," it added.