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Rule 31A — value of supply in case of lottery, betting, gambling and horse racing — uses:
A100% of face value of ticket
B100/128 × face value (for State lotteries earlier) — now the face value or amount paid/payable, whichever is higher
C100% of price notified by the organising State
DCost of printing tickets
Answer & Solution
Correct answer: B. 100/128 × face value (for State lotteries earlier) — now the face value or amount paid/payable, whichever is higher
1. Rule 31A (substituted w.e.f. 01.03.2020) — value for lotteries is 100/128 of face value of ticket OR price notified by the State Government in the Official Gazette, whichever is higher. Under 28% tax rate this maps to a 28% effective levy on face value.
2. For betting/gambling/horse racing — value is 100% of the bet placed.
3. Notification 1/2024 simplified further for specified actionable claims (full face value).
_Source: ICAI BoS CA Final Paper 8, Ch 5 "Value of Supply", §Rule 31A_
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