As per Lotteries Regulation Act 1998, Lottery is defined as “a scheme, in whatever form and by whatever name called, for distribution of prizes by lot or chance to those persons participating in the chances of a prize by purchasing tickets; (c) “prescribed” means prescribed by rules made under this Act.

And the Value of Supply of lottery is defined under two categories:
1. State run Lottery
2. State Authorised Lottery

There is a variation in the valuation of supply of lottery under these two categories
Under a State-run Lottery, the value of supply is deemed as 100/112 of the face value of ticket or of the price as notified in the Official Gazette whichever is higher.

Under a State-Authorised Lottery, the value of supply is deemed as 100/128 of the face value of ticket or of the price as notified in the Official Gazette whichever is higher. Let face value of lottery ticket be Rs.128 then value of supply under a state-run lottery is equal to (128*100/112) Rs.114 and whereas the value of supply under a state authorised lottery is equal to (128*100/128) Rs.100

The Central Government based on recommendation of Council cleared the ambiguity on valuation of supply of lottery under a State-run Lottery and a State-Authorised Lottery by issuing the following notification:

“The value of supply of lottery shall be deemed to be 100/128 of the face value of ticket or of the price as notified in the Official Gazette by the Organising State, whichever is higher.

For the purposes of this sub-rule, the expression “Organising State” has the same meaning as assigned to it in clause (f) of sub-rule (1) of rule 2 of the Lotteries (Regulation) Rules, 2010.”.

And according to above notification the term “Organising State” under clause (f) of sub-rule (1) of rule 2 of the Lotteries (Regulation) Rules, 2010 is defined as

“The State Government which conducts the lottery either in its own territory or sell its tickets in the territory of any other state.”

Thus, the above notification clearly defined the value of supply of lottery by eliminating various rates that have been prevailed earlier.

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