Ahead Of IPL, DGGI Cracks Down On Offshore Online Gaming Entities Evading GST

The Directorate General of Goods and Services Tax Intelligence (DGGI) has stepped up its enforcement action against offshore online gaming platforms, in connection with evading GST.

The move comes ahead of the Indian Premier League (IPL) season, combating illegal gaming operations, ensuring more regulated gaming environment for all.

Under its recent action, the DGGI targeted bank accounts associated with illegal gaming platforms, attaching nearly 2,000 accounts and freezing Rs. 4 crore. In another move, 392 bank accounts linked to UPI IDs on offshore websites were frozen, with Rs.122.05 crore provisionally attached, finance ministry stated on Saturday.

These actions were carried out with the cooperation of the Indian Cyber Crime Coordination Centre and the National Payments Corporation of India.

The crackdown also exposed several Indian nationals running online money gaming platforms from overseas. These individuals were found to be using 166 mule accounts linked to these platforms which have been blocked, while three suspects have been arrested. Investigations into other individuals and networks are ongoing.

Online money gaming is classified as an actionable claim, making it subject to a 28% tax. All entities involved in this industry are required to register under GST and comply with the tax requirements. However, many offshore operators have been found to be evading these regulations by failing to register, concealing taxable pay-ins, and bypassing tax obligations.

DGGI is learnt to have targeted over 700 offshore entities involved in online gaming, betting, and gambling.

As part of the crackdown, the DGGI has blocked 357 websites of illegal or non-compliant offshore gaming entities, working in collaboration with the Ministry of Electronics and Information Technology (MeitY) under Section 69 of the IT Act, 2000.

The blocking of these websites is aimed at preventing Indian users from accessing platforms that do not comply with Indian tax laws.

Foreign operators of illegal online gaming platforms not only evade taxes but also distort fair competition, harming local businesses and undermining the integrity of the market, the ministry underlined.

These foreign entities often create new web addresses to circumvent restrictions, and funds processed through mule accounts can potentially be diverted to illegal activities, posing a national security risk, it stated.

Additionally, high-profile Bollywood celebrities, cricketers, and social media influencers have been found endorsing these illegal platforms, further raising concerns. The DGGI has urged the public to exercise caution, avoid engaging with offshore online gaming platforms, and only use regulated platforms to protect their finances and contribute to national security.

The growing online money gaming sector, which includes both domestic and international operators, has come under scrutiny as many offshore entities are found to be violating tax laws.