India’s Andhra Pradesh eyes lotteries, online gaming for tax revenue boost
In an effort to expand its tax revenue base, the Indian state of Andhra Pradesh is reportedly considering the legalisation of state lotteries and online gaming. The initiative is part of a broader strategy aimed at generating approximately $1.58 billion (₹13,100 crore) through various additional taxes and levies.
The Department of Finance has already circulated the proposals among relevant departments, with Chief Minister N Chandrababu Naidu (depicted in the featured image) expected to make a final decision soon, local daily The Hindu Businessline reported, quoting government sources.
A senior official confirmed to the media organisation that legal consultations are ongoing regarding the taxation of lotteries and online gaming, as lotteries are currently banned in the state. “Multiple approaches are being explored to generate revenue from these sectors,” the official stated.
Key tax proposals
The proposed tax measures to raise additional revenue include:
- A 1 percent cess on State Goods and Services Tax (SGST), projected to generate $570 million (₹4,700 crore).
- Value-added tax (VAT) on liquor and mobile phones, expected to bring in $160 million (₹1,300 crore).
- A tax on state-run lotteries, estimated to contribute $365 million (₹3,000 crore).
An increase in entertainment tax, which could yield $280 million (₹2,300 crore).
Several of these proposals, including the entertainment tax hike and additional VAT on liquor, are under legal review. If implemented, the entertainment tax increase would result in higher prices for movie tickets, amusement parks, and other recreational activities.
Legal and judicial considerations
While the state is keen on regulating online gaming, the issue is currently under judicial review. The Andhra Pradesh High Court, based in Amaravati, is set to hear the matter on 26 March 2025.
As the government weighs legal and policy challenges, its decision on lotteries and online gaming taxation could have major implications for Andhra Pradesh’s fiscal stability and regulatory landscape, as well as for investors and businesses in the gaming and entertainment sectors.
In related news, India’s Supreme Court on Tuesday, 19 March 2025, adjourned a crucial case on gaming taxation. The case, which pertains to the imposition of a 28 percent Goods and Services Tax (GST) on online gaming, has significant implications for the industry. The delay prolongs uncertainty for gaming operators, investors, and state governments looking to regulate and tax the sector.
