The investigation into 29 actors, influencers and YouTubers for allegedly endorsing illegal online betting platforms could soon widen, as the GST department is reportedly preparing to examine possible tax violations linked to these endorsements.
The Enforcement Directorate (ED) had earlier booked the celebrities under the Prevention of Money Laundering Act (PMLA), 2002, after uncovering over Rs 50 crore in payments made to various media and marketing firms. These firms were allegedly involved in promoting offshore betting apps such as Parimatch, JeetWin and similar platforms, which are banned in India.
The ED's findings have now triggered the interest of tax authorities, who are evaluating whether these financial transactions comply with GST laws, especially under the framework introduced in 2023 that mandates registration for offshore gaming and betting platforms catering to Indian users. Importantly, the GST regime clarifies that such registration does not legalize the activity itself, but ensures tax compliance.
According to officials, if the GST department proceeds with a formal probe, it will likely focus on whether:
- Celebrities and media firms properly declared income received from promotions.
- Offshore platforms violated GST norms by not registering or paying tax.
- There were potential violations of Section 122 and Section 132 of the CGST Act, 2017, which deal with suppression of taxable transactions and evasion.
The platforms in question are alleged to have caused financial distress to users, especially youth, who were influenced by high-profile celebrity endorsements. Complaints from affected individuals claim they were misled into placing bets on apps falsely portrayed as legitimate entertainment platforms.
While several celebrities have claimed they severed ties upon learning of the nature of the platforms, others are reportedly continuing to promote similar betting apps, further fueling regulatory scrutiny.
Experts believe a GST probe would mark a significant step towards tightening enforcement in the rapidly growing digital gaming and gambling sector. It could also establish accountability among public figures promoting such platforms, highlighting their role in influencing consumer behavior.
The dual scrutiny by ED and GST authorities underscores the government's broader effort to crack down on illegal online betting, promote responsible advertising practices, and ensure tax compliance in the digital economy.
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