A business scheme that has been thriving in cities like Bengaluru and Mysuru has now made its way into Karnataka’s coastal region, attracting participants with promises of lucrative monthly prizes such as apartments, cars, bikes, and even a kilogram of gold. To boost its appeal, the scheme is heavily promoted by celebrities, drawing in many hopeful individuals.
Participants are required to pay a monthly fee of Rs 1,000. If 10,000 people enroll, the organizers collect Rs 1 crore. From this, Rs 50 lakh is allocated for the prizes in the first month, leaving the organizers with a profit of Rs 50 lakh. Over the span of a year, this profit could amount to Rs 6 crore. The scheme claims to offer prizes worth over Rs 1 crore in its final months. However, questions arise about how organizers would manage such massive payouts, especially when they would need Rs 9 crore to reward approximately 9,000 members.
The schemes often employ young individuals on a commission basis for publicity and membership recruitment. Additionally, participants who bring in new members also earn commissions, making it more of a pyramid-style setup. The primary targets are typically government employees, corporate professionals, and middle-class individuals.
Promotions featuring cine actors and other celebrities run across various social media platforms like Facebook, Instagram, X (formerly Twitter), and YouTube. While these endorsements seem attractive, many fans may risk losing money if the schemes turn out to be fraudulent.
According to tax regulations, any prize won through a lucky draw or similar schemes is taxable at 30%. For example, if someone wins Rs 1 lakh, they would owe Rs 30,000 in taxes. Don Prakash, a chartered accountant in Mangaluru, notes that if a prize pool exceeds Rs 50 lakh, the income tax department should collect Rs 15 lakh from the winners. However, the scheme organizers claim that no taxes are applicable, raising suspicion about their legitimacy.
The lack of action from tax authorities further adds to the growing concerns surrounding these schemes, leading many to question whether they are operating within legal boundaries or engaging in potential fraud.
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