From February 2023, Kerala lottery winners will get a one-day class on financial management. After the programme was announced by Finance Minister KN Balagopal during the Budget presentation in March last year, the government had entrusted Gulati Institute of Finance and Taxation in Thiruvananthapuram to draft the content and recommendations on financial training for lottery winners. A team headed by N Ramalingam recently submitted its recommendations to the government. Experts will conduct classes for lottery winners on all aspects of financial management, including investments.
The financial training programme was announced after several reports of lottery winners struggling to manage the large amounts surfaced. “Individuals who receive large sums through lotteries will be trained by the Department of Finance, in collaboration with financial experts, on how to utilise the amount,” the Minister said.
Winners are also often unaware of the taxes they have to remit, which sometimes lands them in trouble. There will be a deduction of 10% on the total prize money as commission for the lottery agent, followed by a 30% income tax cut by the state government. For someone who wins the Onam Bumper of Rs 25 crore, after reducing the agent’s commission (Rs 2.5 crore) and income tax (Rs 6.75 crore), the winner will be left with Rs 15.75 crore. This amount will reach the winner’s bank account. However, deductions don’t end there.
The 37% surcharge on the income tax for those with an income above Rs 5 crore will then be deducted. In the Onam Bumper example given above, 37% of Rs 6.75 crore is Rs 2.49 crore. Lastly, there is also a 4% health and education cess that’s levied on top of the income tax and surcharge, which amounts to Rs 36.99 lakh. So ultimately, a person who wins Rs 25 crore, will be deducted of Rs 12.11 crore and be left with a total of Rs 12.88 crore.
Onam Bumper lottery tickets, which offer the highest prize money, witnessed record sales in 2022, selling over 66.5 lakh tickets, as compared to the 54 lakh in 2021. Each ticket costs around Rs 500 and the agent who sells more than 1000 tickets gets a commission of Rs 99.69.