The Andhra Pradesh Government is considering the legalization of state lotteries and online gaming as part of its strategy to raise up to ₹13,100 crore through a variety of new taxes and levies to enhance its tax revenue.
These proposals have been disseminated among relevant departments by the Finance Department, and Chief Minister N. Chandrababu Naidu is expected to make a decision “very soon,” according to a senior official interviewed by BusinessLine.
Legal advice is also being sought regarding the proposed taxation on lotteries and online gaming, given the current prohibition on lotteries in Andhra Pradesh. “Several strategies are being investigated to generate revenue from these sectors,” the official stated.
The primary proposals aimed at achieving the projected ₹13,000 crore in additional tax revenue include a one percent cess on the State GST, anticipated to generate ₹4,700 crore, VAT on items such as alcohol and mobile phones expected to yield ₹1,300 crore, a tax on state lotteries projected to collect ₹3,000 crore, and an increase in entertainment tax, which could bring in ₹2,300 crore. Some of these initiatives, including the increase in entertainment tax and additional VAT on liquor, have already undergone legal review, the official noted.
Should these proposals gain approval, the rise in entertainment tax would likely lead to higher ticket prices for cinemas, parks, and other recreational facilities.
Boosting tax revenue is vital for the State Government, particularly in light of the necessity to develop infrastructure to attract investments and sustain the extensive welfare programs being implemented as part of the pre-election commitments under the Super Six Schemes.
According to budget forecasts for 2025-26, total revenue receipts are estimated at ₹2,17,976 crore, with an initial deficit of ₹67 crore. Of this total, tax revenue and non-tax revenue are projected at ₹1,09,006 crore and ₹19,119 crore, respectively. Central taxes and grants are expected to account for ₹57,566 crore and ₹32,284 crore, respectively. If the new tax measures are accepted, tax revenue could increase significantly.
While there is a belief that new taxes are essential for the development of the new capital, Amaravati, the State Government has recently clarified that the tax revenue generated will not be allocated to this project, which will instead be financed through loans from both international and national financial institutions.
Regarding online gaming, the issue is currently before the Honorable High Court of Andhra Pradesh in Amaravati, with the next hearing scheduled for March 26, 2025.
