Ahead of the crucial GST Council meeting, the firm has said that the two issues have severely affected the industry with reduction in point of sale (PoS) and job losses.
"Lotteries should be seen as an economic activity which creates large scale employment and generates revenue to the state government for public welfare activity rather than a gambling activity," said Kamlesh Vijay, Chief Executive Officer (CEO) at Sugal & Damani.
Under the GST Act, there are two rates prescribed for the sale of lottery tickets. One is 12 per cent if the lotteries are sold within the same state, and the other is 28 per cent if a state sells the lottery tickets in other states.
The other issue raised by the private lottery operators is levy of GST on the face value of lottery tickets, including the prize money awarded to the winners. The operators maintain that this has crippled the industry by rampant increase in illegal lottery and is also affecting tax collection of the government.
"Effective overall tax incidence of service tax and lottery tax was 6.71 per cent on the face value in pre-GST era, whereas now it is nearly 28 per cent on the face value, including the prize money which is a whopping 300 per cent increase in the tax incidence," Vijay said.
Lobbying for a favourable tax regime, the All India Federation of Lottery Trade and Allied Industries had in June this year given a representation to Finance Minister Nirmala Sitharaman and sought to address the issues impacting the sector.
"It may be relevant to note here that in most foreign jurisdictions, the governments have either levied a direct tax or an indirect tax on prize winnings, not both. In India, prize money is also taxable in the hands of the recipient at the highest rate of tax as per the provisions of Section 115BB of the Income Tax Act, 1961," the trade body had argued.
Lottery is popular in many northeast states such as Mizoram, Nagaland and Manipur.
(Nirbhay Kumar can be contacted at nirbhay.k@.in)
( With inputs from IANS )