The Directorate General of GST Intelligence (DGGI) has been empowered to directly issue takedown notices to intermediaries to block online money gaming apps and websites evading Goods and Services Tax (GST). This authority, granted under Section 79(3)(b) of the Information Technology Act, was formalized through a government notification on Monday.
The Department of Revenue has designated an Additional or Joint Director (Intelligence) at the DGGI headquarters as the nodal officer for this purpose. This move aims to clamp down on offshore gaming entities that fail to comply with India’s GST laws.
Under Section 14A of the Integrated Goods and Services Tax (IGST) Act, offshore online money gaming platforms offering services in India are required to register under the Simplified Registration Scheme and appoint an Indian representative to ensure tax compliance. Non-compliance can lead to blocking orders issued under Section 69A of the IT Act.
Previously, such orders needed to be routed through the Ministry of Electronics and Information Technology (MeitY). With this new directive, the DGGI can now independently issue takedown notices, expediting the process to tackle tax evasion in the online gaming sector.
Online Gaming Industry Flagged as High-Risk
The DGGI, in its FY24 annual report, flagged the online money gaming sector as a high-risk industry for tax evasion, cyber fraud, and money laundering. It revealed that the sector had evaded GST worth ₹81,875 crore across 78 cases - the highest for any sector that year.
Gaming entities in India attract 28% GST on the total money deposited by players. However, many platforms offering games of chance, such as betting and gambling, operate from tax havens like Curacao Islands, British Virgin Islands, and Malta to avoid taxation.
In December, Minister of State for Finance Pankaj Chaudhary informed the Lok Sabha that 642 offshore entities had been identified for investigation.
Stricter Measures to Tackle Tax Evasion
The government’s move to empower the DGGI aligns with its broader strategy to crack down on tax evasion in the online gaming sector. The new powers are expected to improve compliance and ensure that offshore gaming companies pay their dues under India’s tax regime.
For GST purposes, "online money gaming" includes games where players deposit money with the expectation of winning, covering both games of skill and chance, including permissible and illegal games.
This decisive step is expected to not only curb revenue losses but also address concerns related to cyber fraud and juvenile delinquency associated with the gaming industry.
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