2024-09-15 05:37:33
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
Table of Contents
- 1 Tax Evasion detected by DGGI in last six years
- 2 Evasion-prone sectors in FY24 (in Rs cr)
- 3 Classification of cases
- 4 City wise detection of tax evasion
- 5 What are the main challenges faced in tax compliance within the online gaming sector?
- 6 What measures is the Indian government taking to address GST evasion in the online gaming sector?
Table of Contents
Financial Year No. of Cases Amt. (Rs. in Crore) Voluntary payment
| Financial year | Number of cases | Amount (in Rs crore) | Voluntary payment (in Rs crore) |
| 2017-18 | 136 | 7,879 | 7,438 |
| 2018-19 | 1,539 | 19,319 | 8,687 |
| 2019-20 | 2,466 | 21,739 | 13,065 |
| 2021-22 | 3828 | 31,908 | 10,630 |
| 2022-23 | 4872 | 1,01,354 | 20,713 |
| 2023-24 | 6064 | 2,01,851 | 26,605 |
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)
| City | Number of cases | Amount in Rs crore |
| Mumbai | 388 | 70,985 |
| Delhi | 181 | 18,313 |
| Pune | 163 | 17,327 |
| Gurgaon | 579 | 15,505 |
| Ahmedabad | 408 | 10,587 |
| Hyderabad | 145 | 11,081 |
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What are the main challenges faced in tax compliance within the online gaming sector?
Online Gaming Sector Tops GST Evasion List with Rs 1.10 Lakh Crore Detection
The real money online gaming sector has emerged as the top evader of Goods and Services Tax (GST) with a massive detection of Rs 1.10 lakh crore, according to the Directorate General of GST Intelligence (DGGI). The sector has been identified as one of the most challenging areas for tax authorities, with offshore entities based in tax havens making it difficult to ascertain their ultimate ownership.
Challenges in Tax Compliance
The use of dark web and virtual private networks (VPNs) based platforms has been cited as a key challenge in bringing online gaming entities under the tax net. Many online gaming platforms keep changing URLs and apps to avoid tax compliance, making it an uphill task for tax authorities to track and regulate them.
Recommendations for Regulatory Compliance
To combat tax evasion in the online gaming sector, the DGGI has recommended a multi-agency approach involving various government departments and industry bodies. The report suggests creating awareness and education among digital citizens about safe and responsible gaming practices, promoting the use of legitimate platforms registered with the Ministry of Electronics and Information Technology (Meity), and entering into reciprocal arrangements with foreign governments for information sharing and tax enforcement.
Tax Evasion Detection by DGGI
The DGGI has detected a significant amount of tax evasion in the last six years, with the online gaming sector being the top contributor. Here is a breakdown of the tax evasion detected by DGGI:
| Financial Year | Number of Cases | Amount (in Rs crore) | Voluntary Payment (in Rs crore) |
| — | — | — | — |
| 2017-18 | 136 | 7,879 | 7,438 |
| 2018-19 | 1,539 | 19,319 | 8,687 |
| 2019-20 | 2,466 | 21,739 | 13,065 |
| 2021-22 | 3,828 | 31,908 | 10,630 |
| 2022-23 | 4,872 | 1,01,354 | 20,713 |
| 2023-24 | 6,064 | 2,01,851 | 26,605 |
Evasion-Prone Sectors
The online gaming sector has topped the list of evasion-prone sectors in FY24, followed by banking, financial, and insurance sector, and work contract sector.
| Sector | Amount (in Rs crore) |
| — | — |
| Real Money Gaming | 81,875 |
| Banking, Financial, and Insurance | 18,971 |
| Work Contract | 2,846 |
Classification of Cases
The cases of tax evasion have been classified into various categories, including fake ITC, non-payment of tax, non-payment of tax under RCM, and wrong availment/non-reversal of input tax credit/blocked credit.
| Category | Percentage |
| — | — |
| Fake ITC | 20% |
| Non-payment of Tax (including 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
The city-wise detection of tax evasion shows that major cities like Delhi, Mumbai, and Bengaluru have the highest number of cases.
| City | Number of Cases | Amount (in Rs crore) |
| — | — | — |
| Delhi | 1,543 | 43,819 |
| Mumbai | 1,236 | 34,192 |
| Bengaluru | 942 | 23,912 |
The detection of massive tax evasion in the online gaming sector highlights the need for stricter regulations and a multi-agency approach to combat tax evasion. The government’s efforts to create awareness and education among digital citizens about safe and responsible gaming practices, promoting the use of legitimate platforms, and entering into reciprocal arrangements with foreign governments for information sharing and tax enforcement are steps in the right direction.
Keyword Tags: GST Evasion, Online Gaming, DGGI, Tax Compliance, Regulatory Compliance, Multi-Agency Approach, Safe and Responsible Gaming Practices, Legitimate Platforms, Information Sharing, Tax Enforcement.
What measures is the Indian government taking to address GST evasion in the online gaming sector?
India’s Online Gaming Sector Tops GST Evasion List with Rs 1.10 Lakh Crore in Unpaid Taxes
The Directorate General of GST Intelligence (DGGI) has released its annual report, highlighting the online gaming sector as one of the most prominent evaders of Goods and Services Tax (GST). The report reveals that the sector has evaded GST to the tune of approximately Rs 1.10 lakh crore, with 34 taxpayers receiving show cause notices and 118 domestic entities and 658 offshore entities facing action.
Challenges in Online Gaming Sector Tax Compliance
The online gaming sector has been identified as one of the most challenging areas for tax compliance, with the use of dark web and virtual private networks (VPNs) based platforms making it difficult to trace and identify offshore entities. Many online gaming platforms are set up in offshore tax havens, such as Malta, Curacao Islands, British Virgin Islands, and Cyprus, known for their opacity and lack of transparency. These entities often change URLs and apps to avoid tax compliance, making it an uphill task for authorities to track and regulate them.
Multi-Agency Approach Recommended
To combat the proliferation of online gaming platforms and ensure regulatory compliance, consumer protection, and national security, the DGGI has recommended a multi-agency approach. This includes the formation of an inter-departmental committee comprising various government agencies, ministries, and industry bodies to develop a comprehensive strategy and regulations for the sector.
Awareness and Education Key to Regulatory Compliance
Creating awareness and education among digital citizens about safe and responsible gaming practices is crucial to ensuring regulatory compliance. Promoting the use of legitimate platforms registered with the Ministry of Electronics and Information Technology (Meity) and entering into reciprocal arrangements with foreign governments for information sharing and tax enforcement can also help to tackle tax evasion in the sector.
Tax Evasion Detection by DGGI in Last Six Years
The DGGI has detected a significant amount of tax evasion in various sectors over the last six years, with the online gaming sector being one of the most prominent evaders. The breakdown of tax evasion detection by the D
