An inter-departmental committee with representatives from the ED, RBI, tax and consumer affairs departments may be set up to combat the proliferation of online gaming platforms and ensure regulatory compliance, a DGGI report said.
The GST intelligence wing of the Central Board of Indirect Taxes and Customs (CBIC) has initiated action against 118 domestic online gaming entities, and Show Cause Notices have been issued to 34 taxpayers involving tax amounts of ₹1.10 lakh crore.
The notices were issued to these gaming companies as they were not paying GST at a 28 per cent rate.
Furthermore, 658 offshore entities have been identified as non-registered/non-compliant entities and are being investigated by the DGGI. Also, 167 URLs/websites have been recommended for blocking.
The Directorate General of GST Intelligence (DGGI) annual report 2023-24 flagged that online money gaming’ is a “high-risk” industry for tax evasion, money laundering, cyber frauds, juvenile delinquency and various socio-economic evils.
Despite the legal clarity with effect from October 1, 2023, bringing the gaming entities under the tax net continues to be an uphill task.
Many such firms are set up in offshore tax havens (i.e. Malta, Curacao Islands, British Virgin Islands, Cypress etc.) known for their opacity, thus making it difficult to ascertain their ultimate ownership.
There are online gaming platforms which keep on changing their URL/website/apps to avoid tax compliance. The use of dark web or VPN-based platforms for such supply further accentuates the difficulties in tax law enforcement, the DGGI said.
“Therefore, a multi-prolonged approach to deal with this sector is need of the hour. An Inter-department committee comprising CBIC, CBDT, ED, MeITY, MCA, MIB, RBI, Department of Consumer
Affairs and the like along with industry bodies may be set up to develop comprehensive strategies and regulations to combat the proliferation of such platforms, ensuring regulatory compliance, consumer protection and national
security,” the DGGI said in its report was released on Saturday.
In October 2023, the government clarified in the GST law that online gaming attracts a 28 per cent tax on the total sum deposited by the players with the entity.
PTI