online gaming: Real money gaming sector tops GST evasion list

The real money online gaming sector topped the apex goods and services tax (GST) intelligence and investigation agency’s evasion list with detection to the tune of about Rs 1.10 lakh crore, involving show cause notices to 34 taxpayers, action against 118 domestic entities and 658 offshore entities.

In its annual report released Saturday, the Directorate General of GST Intelligence (DGGI) identified online gaming as one of the challenging sectors with offshore entities based in tax havens.

“Bringing the gaming entities under tax net continues to be an uphill task,” the report said. Use of the dark web and virtual private networks (VPNs) based platforms for such have been cited as key challenges.

The report added that the DGGI had recommended 167 URLs and websites for blocking.

“Many such firms are set up in offshore tax havens (Malta, Curacao Islands, British Virgin Islands, Cyprus etc.), known for their opacity, thus making it difficult to ascertain their ultimate ownership,” DGGI said in its report. Some online gaming platforms keep changing URLs and apps to avoid tax compliance.

The DGGI recommended a multi-agency approach to deal with this sector.

“An inter-departmental committee, comprising the Central Board of Indirect Taxes and Customs, Central Board of Direct Taxes, Enforcement Directorate, ministries of electronics and information technology, corporate affairs, information and broadcasting, consumer affairs, Reserve Bank… along with industry bodies may be set up to develop comprehensive strategy and regulations to combat the proliferation of such platforms, ensuring regulatory compliance, consumer protection and national security,” the report said.

Creating awareness and education among digital citizens about safe and responsible gaming practices, promoting the use of legitimate platforms registered with Meity and entering into reciprocal arrangements with foreign governments for information sharing and tax enforcement may go a long way toward effecting regulatory compliance.

Tax Evasion detected by DGGI in last six years

Financial Year No. of Cases Amt. (Rs. in Crore) Voluntary payment

Evasion-prone sectors in FY24 (in Rs cr)

Real money gaming: 81,875

Banking Financial and insurance: 18,971

Work Contract: 2,846

Classification of cases

Fake ITC: 20%

Non Payment of Tax (include Clandestine Supply. Undervaluation etc: 46%

Non payment of Tax under RCM: 5%

Wrong availment/non- reversal of Input Tax Credit/Blocked Credit: 19%

others: 10%

City wise detection of tax evasion

City Number of Cases Amount (in Rs crore)