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Tax On Lotteries

Tax On Lotteries:

The Supreme Court has held that a lottery conducted by Government of India, states or authorised by a state or conducted by private entities is an activity falling within the nomenclature of ‘betting and gambling’.

  • And hence, the State Legislature has the competence to tax lottery scheme which is gambling being conducted not only by the Government of India or the Government of any State or by any other agency or instrumentality of a particular State but also by a private entity within the State as gambling.
  • Thus, the apex court allowed the appeals filed by Karnataka and Kerala governments and set aside the orders of Karnataka and Kerala High Courts which held that they lacked the legislative competence to levy tax on the lotteries.
  • The tax sought to be imposed by the State Legislatures of Karnataka and Kerala by way of the impugned Acts, is traceable to the power conferred on the State Legislatures under Entry 62 of List II.
  • The Seventh Schedule to the Constitution of India defines and specifies allocation of powers and functions between Union & States. It contains three lists; i.e. 1) Union List, 2) State List and 3) Concurrent List.
  • Originally there was 97 subjects in union list but now it is 100 subjects in union list.