The determination of value of supply for lottery, betting, gambling and horse racing in the context of Section 15 of the GST Act, 2017, is actually specified under Rule 31A of the CGST Rules, not directly in Section 15 itself. Here’s a breakdown of the key points:

For lotteries:

The value of supply for lotteries depends on whether it’s run by the State Government:

State-run lotteries:

Higher of two options:

100/128 of the face value of the ticket.

100/128 of the price notified in the Official Gazette by the organizing State.

Non-State-run lotteries:

Not specified under Rule 31A, likely subject to general valuation rules of Section 15 and Rule 30.

For betting, gambling and horse racing:

The value of supply is simply 100% of the face value of the bet or the amount paid into the totalisator.

Additional notes:

These value determination rules GST Act, 2017,  apply regardless of the transaction value mentioned in Section 15(1) of the GST Act.

For lotteries run by State Governments, the “Organizing State” refers to the definition in clause (f) of sub-rule (1) of Rule 2 of the Lotteries (Regulation) Rules, 2010.

                                     EXAMPLE

State: Tamil Nadu

Scenario 1: State-run lottery (run by and sold only within Tamil Nadu)

• Type of lottery: This falls under sub-rule (2)(a) of Rule 31A.
• Value of supply: 100/112 of the face value of the ticket OR the price notified in the Tamil Nadu Official Gazette, whichever is higher.
• Example: If the face value of a lottery ticket is ₹100 and the notified price is ₹110, the value of supply would be ₹110 (as it’s higher than 100/112 * ₹100 which is approximately ₹89.29).

Scenario 2: State-authorized lottery (sold in other states besides Tamil Nadu)

• Type of lottery: This falls under sub-rule (2)(b) of Rule 31A.
• Value of supply: 100/128 of the GST Act, 2017,  face value of the ticket OR the price notified in the Tamil Nadu Official Gazette, whichever is higher.
• Example: If the face value of a lottery ticket is ₹50 and the notified price is GST Act, 2017, ₹55, the value of supply would be ₹55 (as it’s higher than 100/128 * ₹50 which is approximately ₹39.06).

Scenario 3: Betting, gambling, or horse racing in a race club

• Value of supply: 100% of the face value of the bet or the amount paid into the totalisator.
• Example: If you place a ₹200 bet, the value of supply is also ₹200.

                                 FAQ QUESTIONS

General:

• Q: Are lottery, betting, gambling, and horse racing considered supplies under GST?
  • A: Yes, only lottery, betting, GST Act, 2017, and gambling are treated as supplies under GST. All other actionable claims (like games of chance in online gaming) are not considered supplies.
• Q: What section of the GST Act deals with the value of supply in these cases?
  • A: Section 15 of the GST Act defines the taxable value for various situations. However, specific rules for lottery, betting, gambling, and horse racing are laid out in Rule 31A of the CGST Rules, 2017.

Determination of Value:

• Q: How is the value of supply determined for lotteries GST Act, 2017,?
  • A: It depends on the type of lottery:
    • State-run lotteries: The value is considered to be 100/112 of the face value of the ticket or the price notified in the official gazette by the organizing state, whichever is higher.
    • Other authorized lotteries: The value is considered to be 100/128 of the face value of the ticket or the price notified in the official gazette by the organizing state, whichever is higher.
• Q: How is the value of GST Act, 2017, supply determined for betting, gambling, and horse racing?
  • A: The value is simply 100% of the face value of the bet or the amount paid into the totalisator.

Additional Points:

• Q: Are online versions GST Act, 2017, of these activities (e.g., online betting) taxed similarly?
  • A: Currently, the GST treatment of online gaming, casinos, and horse racing is under discussion. As of January 19, 2024, they’re not explicitly covered under the GST scope. However, the 50th GST Council meeting in July 2023 proposed a 28% GST levy on the full face value for these activities, with an amendment to the GST law expected soon.
• Q: Where can I find more information about these rules?
  • A: You can refer to the official Central Board of Excise & Customs (CBIC) website for FAQs and updates on GST: https://cbic-gst.gov.in/
  • Additionally, consulting a tax professional is recommended for specific situations and detailed guidance.

                                         CASE LAWS

Relevant Rule:

• Rule 31A(2)(a) & (b): These sub-rules determine the value of supply for GST Act, 2017, lotteries as follows:
  • State-run lotteries: 100/112 of the face value of the ticket or the price notified in the Gazette by the organizing state, whichever is higher.
  • State-authorized lotteries: 100/128 of the face value of the ticket or the price notified in the Gazette by the organizing state, whichever is higher.

Relevant Case Laws:

• Central Board of Indirect Taxes GST Act, 2017, and Customs (CBIC) Circular No. 124/13/2017-GST dated 16.12.2017: This circular clarifies that games of skill (like rummy) aren’t covered under betting or gambling and are excluded from GST under Schedule III of the CGST Act.
• Karnataka High Court Judgement in M/s Dream 11 Fantasy Private Limited GST Act, 2017, Vs. Union of India &Ors. (2019): This judgement reiterates the CBIC circular, stating that fantasy sports platforms like Dream11 operate on skill and aren’t subject to GST on betting/gambling grounds.

Additional Points:

• Rule 31A(3): This sub-rule states that the value of supply for betting, gambling, and horse racing is 100% of the face value of the bet or the amount paid into the totalisator.
• No specific case laws currently challenge the valuation methodology under Rule 31A.

Value of supply in cases where Kerala flood cess is applicable

1. Determine the value of supply as per Section 15 of the GST Act, 2017: This section defines the value of supply as the consideration received or receivable for the supply of goods or services, including incidental expenses like packing, freight, insurance, etc. (Unless these are separately charged and shown in the invoice).
2. Exclude the Kerala Flood Cess from the value of supply: Once you have GST Act, 2017, calculated the value of supply based on Section 15, you need to remove the amount of Kerala Flood Cess from it. This ensures that the cess is not levied upon itself, creating a double taxation scenario.

Example:

Let’s say you sell goods in Kerala with a selling price of INR 10,000. The applicable SGST rate is 5%, and the Kerala Flood Cess rate is 1%.

1. Value of supply as per Section 15:
   • SGST = (10,000 * 5%) = INR 500
   • Value of supply = 10,000 + 500 = INR 10,500
2. Value of supply for Kerala Flood Cess:
   • Kerala Flood Cess = (10,500 * 1%) = INR 105
   • Value of supply for cess = 10,500 – 105 = INR 10,395

Therefore, the Kerala Flood Cess would be calculated on INR 10,395, not INR 10,500.

It’s important to remember that the Kerala Flood Cess was initially introduced for two years but continues to be in effect due to its extension by the state government.

For further clarification:

• You can refer to Rule 32A of the CGST Rules, 2017, for the precise wording regarding the value of supply for the Kerala Flood Cess.
• You can also consult the FAQ on Kerala Flood Cess available on the Kerala Taxes website for additional information.

                                        EXAMPLE

Unfortunately, your question requires more specific information to provide an accurate example of the value of supply for Kerala Flood Cess under Section 15 of the GST Act 2017 in a particular state in India. To calculate the value of supply correctly, I need details like:

• Type of Supply: Are you dealing with intra-state, inter-state, or import/export of goods or services?
• Specific State: You mentioned a specific state, but haven’t named it. Knowing the state is crucial as Kerala Flood Cess only applies within Kerala.
• Nature of Transaction: Is it a B2B (business to business) or B2C (business to consumer) transaction?
• Value of Invoice: Knowing the original invoice value before GST and other applicable taxes is essential.

                                 FAQ QUESTIONS

Q1. What is the “value of supply” for calculating Kerala Flood Cess under Section 15 of the GST Act, 2017?

A1. The value of supply for Kerala Flood Cess is defined in Rule 32A of the Kerala Goods and Services Tax Rules, 2017. It states that the value of supply shall be deemed to be the value determined under Section 15 of the GST Act, 2017, but excluding the Kerala Flood Cess itself.

Q2. Does this mean the cess is calculated on the transaction value before adding CGST and SGST?

A2. Yes, you are correct. The Kerala Flood Cess is calculated on the taxable value, GST Act, 2017, which is the transaction value of the goods or services excluding CGST, SGST, and any other levies.

Q3. Are there any exceptions to using Section 15 for determining the value of supply?

A3. No, as of today (19 January 2024), GST Act, 2017,  there are no specific exceptions in the rules regarding using Section 15 for value of supply for Kerala Flood Cess. However, it’s always advisable to check for any recent updates or amendments to the Kerala Flood Cess provisions or Rule 32A.

Q4. Does the cess apply to all supplies covered by Section 15?

A4. No, the Kerala Flood Cess is only applicable to certain categories of supplies, as GST Act, 2017, per its specific provisions. These categories include intra-state B2C supplies of goods and services listed under Schedule II, III, and IV of the Kerala State Tax on Goods and Services Rules, 2017. Certain specific goods like gold and diamonds under Schedule V attract a lower cess rate but are still covered.

Q5. Where can I find more information about the Kerala Flood Cess and its applicability?

A5. You can find detailed information on the official website of the Kerala Department of Tax Administration or refer to GST Council notifications and circulars relevant to the cess. Additionally, consulting with a tax professional experienced in Kerala GST would be helpful for specific guidance on your situation.

                                  CASE LAWS

• The Kerala Flood Cess was levied at 1% on certain goods and services in GST Act, 2017,  Kerala for a two-year period starting from July 1, 2019.
• The value of supply for calculating the cess is defined in Rule 32A of the Kerala Goods and Services Tax Rules, GST Act, 2017, 2017. This rule states that the value of supply for the cess is the same as determined under Section 15 of the GST GST Act, 2017,  Act, excluding the Kerala Flood Cess itself.
• Section 15 of the GST Act provides the general principles for determining the value of supply for taxable transactions.