Browse topics

• Governing law

  Name	Law or Code?
  Public Gambling Act, 1867 along with the relevant state legislations (a 'Key Prize Legislation')	Law
  Lotteries (Regulation) Act, 1998 and the Lottery (Regulation) Rules, 2010 (a 'Key Prize Legislation')	Law
  Indian Penal Code, 1860	Law
  Prize Chits and Money Circulation Schemes (Banning) Act, 1978 (a 'Key Prize Legislation')	Law
  Prize Competitions Act, 1955 (a 'Key Prize Legislation')	Law
  Information Technology Act, 2000 read with the relevant rules, more particularly the Information Technology (Reasonable Security Practices and Procedures and Sensitive Personal Information) Rules, 2011	Law
  Consumer Protection Act, 1986	Law
  Advertising Standard Council of India Code	Code
  Telecom Regulatory Authority of India Act, 1997 read with Telecom Commercial Communications Customer Preference Regulations, 2010	Law

  Last modified 10 Feb 2017

• Extra-territoriality

  The Key Prize Legislations do not have an extra-territorial application and prize promotions which are purely operated online and outside India do not fall within the jurisdiction of the relevant regulators of Key Prize Legislations in India.

  However, if prize promotions are advertised to customers in India and a significant nexus is established in India, then regulators may enforce the relevant laws (including Key Prize Legislations) against the promoters of such prize promotions.

  The Indian Penal Code, 1860 and Information Technology Act, 2000 have extraterritorial applicability and in the event that sponsors of prize promotions are held to be in violation of these laws, the regulator is empowered to prosecute for offences committed outside India. The Indian regulators also have the power to block foreign websites which violate Indian laws.

  Last modified 10 Feb 2017

• Skills competitions

  Yes, but ensure:

  • That the winner is determined predominantly on the basis of his or her skill and not chance, and
    
    
  • That the terms are notified to the entrant before entry into the competition

  Competitions where success depends on a substantial degree of skill ie one in which success depends principally upon the superior knowledge, training, attention, experience and adroitness of the player, are permitted under Indian law. This being said, it may be noted that a prize promotion which is predominantly skill based would be constituted as a game of skill despite there being an element of chance. Such prize promotions would be permitted under Indian law.

  Last modified 10 Feb 2017

• Prize draws

  If a competition is determined predominantly on the basis of chance, then it is unlawful if participants pay to enter or to claim/receive a prize. However, a prize promotion which is skill based and only has an element of chance may not be illegal per se.

  Last modified 10 Feb 2017

• Selection of winners

  There are no specific regulations around selection of winners and award of prizes in a competition, however, as a good practice measure, promoters must ensure that prize competitions are conducted under proper supervision, adequate resources are available to administer them, enough time is allowed for each stage of the competition and the process of selection of winners is fair and independent.

  Further, the Advertising Standard Council of India Code requires:

  • That advertisements inviting the public to take part in lotteries or prize competitions permitted under law or which hold out the prospect of gifts shall state clearly all material conditions as to enable the consumer to obtain a true and fair view of their prospects in such activities
    
    
  • Advertisers to make adequate provisions for the judging of such competitions, announcement of the results and the fair distribution of prizes or gifts according to the advertised terms and conditions within a reasonable period of time, and
    
    
  • That with regard to the announcement of results, an advertiser’s responsibility is discharged adequately if the advertiser publicizes the main results in the media used to announce the competition as far as is practicable and advises the individual winners by post

  Last modified 10 Feb 2017

• Judges

  There are no specific regulations in relation to judges or judging for skills competitions. However, for the sake of good practice the panel of judges must be independent, competent, with set standards/criterion for judgment. Further, the criteria and mechanism for judging entries must be made known before, or at time of, entry.

  Last modified 10 Feb 2017

• Prizes

  The Prize Competition Act prohibits 'prize competition(s)' (ie crossword prize competitions, missing-word prize competitions or picture prize competitions, or any puzzle based upon the building up, arrangement, combination or permutation, of letters, words or figures) in which the total value of the prize, whether in cash or otherwise, offered in any month exceeds ₹1,000 (approx. US$15) and the number of entries for such prize competition exceeds ₹2,000 (approx. US$30).

  Other than as mentioned above, there are no specific regulations in relation to prizes for competitions. However, for the sake of good practice, prizes awarded must be as described in their marketing communications, or reasonably equivalent to that description. Participants in instant-win promotions must get their winnings at once or must know immediately what they have won and how to claim without delay, unreasonable costs or administrative barriers.

  Last modified 10 Feb 2017

• Registration requirements and fees

  Registration Requirements

  Prize Competition Act, 1955 requires a person who promotes or conducts any 'prize competition' (as defined above) to obtain a license wherein the total value of the prize(s) to be offered in any month does not exceed ₹1000 (approx. US$15). The promoters of such prize competitions are also required to keep accounts and submit the same to the licensing authority at regular intervals determined by the applicable laws.

  Fees / Taxes Payable

  Depending on the State in India where the license is obtained, a nominal amount will need to be paid as a license fee. In relation to tax obligations, a promoter of a prize competition (irrespective of residency) is liable to withhold tax at a certain percentage of the prize money paid to an Indian resident, should the value of such prize money exceed a pre-determined threshold.

  Last modified 10 Feb 2017

• Other local requirements
  • Promoters must ensure that the participants are above 18 years of age. In case of minors (ie below 18 years), the legal guardian must also be a party to all agreements on behalf of the minor.
    
    
  • Further, based on the nature of the prize promotions and remittance of money in/out of India, there may be implications from the perspective of Indian foreign exchange laws which may be required to be examined on a case to case basis.
    
    
  • If the data collected by the promoter falls within the scope of 'sensitive personal information' (as defined below), the promoter should include specific and express consent of the participant for collecting such data and for onwards sharing (if so proposed).
    
    
  • As per the applicable data protection law in India, sensitive personal data or information includes personally identifiable information relating to:
    
    
    • Passwords
      
      
    • Financial information such as bank account or credit card or debit card or other payment instrument details
      
      
    • Physical, physiological and mental health condition
      
      
    • Sexual orientation
      
      
    • Medical records and history, and
      
      
    • Biometric information of a person
      
      
  • In case the participant is required to purchase a certain product which entitles the participant to enter into a lucky draw in relation to that product, it should be ensured that:
    
    
    • The product indicates the date of closure of the offer
      
      
    • All 'material conditions' are disclosed
      
      
    • If there are any conditions that apply to the lucky draw, ensure that the words 'conditions apply' appear in bold and such conditions are made available to the participant on request
      
      
    • If a prize is being offered by draw of lots for participants who purchase a particular product, ensure that the prize does not reflect an increase in the price of the product, and
      
      
    • The prize that is offered does not cause any loss or injury to the participant whether by eliminating or restricting competition or otherwise

  Last modified 10 Feb 2017

• Timing

  No, although time should be allowed to deal with data protection issues (eg ensuring an appropriate privacy policy is in place and including appropriate tick box functionality for consents).

  Last modified 10 Feb 2017

• Translations

  None required. However, the preferred approach in India is to have the terms and conditions translated into English.

  Last modified 10 Feb 2017

• Penalties for non-compliance

  The majority of the offences under the Key Prize Legislations are punishable with a fine of up to ₹1000 (approx. US$15) or a prison term of two years, or with both.

  A violation of the relevant provisions of the Indian Penal Code, 1860, is punishable for a term which may extend to six months and/or a fine amounting to ₹1000 (approx. US$15). Under the Consumer Protection Act, 1986, a person is liable for punishment under the applicable provisions, with imprisonment for a term ranging between one month to three years, and/or with a fine ranging between ₹2,000 (approx. US$30) to ₹10,000 (approx. US$150), or with both.

  Under the Information and Technology Act, 2000, the maximum compensation/penalty payable to the person affected by a contravention is ₹25,000 (approx. US$375).

  Last modified 10 Feb 2017

• Restrictiveness of regulations

  There is no umbrella legislation in India which lays down detailed requirements in relation to a prize promotion. Prize promotions are generally allowed as long as they do not amount to gambling or a lottery, or an unfair trade practice under the applicable laws. There is no particular registration/licensing requirement, except in the case of a ‘prize competition’. Overall, the legal regime governing prize promotions in India is not particularly restrictive.

  Last modified 10 Feb 2017

• Regularity of sanctions

  It is not common for the relevant authorities to impose monetary fines or prison sentences. There have been very few cases in the past, where sanctions have been imposed within India.

  Last modified 10 Feb 2017

• Key contacts
  

  Indranath Bishnu

  Partner Cyril Amarchand Mangaldas [email protected] T +91 22 6662 8445

  

  Varsha Kashyap

  Associate Cyril Amarchand Mangaldas [email protected] T +91 8879752309