Nearly 650 Offshore Online Gaming Companies Identified By DGCI For Potential Tax Evasion: What We Know So Far

Minister of State for Finance Pankaj Chaudhary highlighted that certain offshore platforms have remained uncooperative and unresponsive to the ongoing probe.

MeitY has been requested to block access to certain websites and URLs.

Source : Onur Binay/Unsplash

The Directorate General of GST Intelligence (DGGI) has identified 642 offshore online gaming platforms for potential tax evasion, Minister of State for Finance Pankaj Chaudhary informed Parliament on Monday. As reported by PTI, These entities are now under investigation for non-compliance with Indian tax laws.

During the proceedings, Chaudhary highlighted that certain offshore platforms have remained uncooperative and unresponsive to the ongoing probe. Consequently, the Ministry of Electronics and Information Technology (MeitY) has been requested to block access to their websites and URLs under Section 14A(3) of the IGST Act, 2017.

"DGGI does not have any reciprocal arrangements with foreign governments. However, 642 offshore entities providing online money gaming/betting/gambling have been identified till date for investigation," Chaudhary said in the Lok Sabha.

Tax Evasion Reported Back In September

In a separate, broader crackdown on GST evasion in September this year, DGGI reported a staggering Rs 2.01 lakh crore of tax evasion during the fiscal year 2023-24, across 6,084 cases. This marks a sharp rise compared to Rs 1.01 lakh crore detected in 2022-23 from 4,872 cases. Key sectors contributing to the evasion include online gaming, Banking, Financial Services, and Insurance (BFSI), along with iron, scrap, and alloys.

The online gaming industry emerged as the biggest contributor to tax evasion in 2023-24, accounting for Rs 81,875 crore from just 78 cases. The BFSI sector followed with 171 cases amounting to Rs 18,961 crore. Other sectors, such as works contract services and pharmaceuticals, reported relatively smaller evasion amounts of Rs 2,846 crore (343 cases) and Rs 40 crore (22 cases), respectively.

The DGGI’s annual report revealed that nearly half (46 per cent) of the evasion cases involved tax underpayment through clandestine supplies and undervaluation, while fake Input Tax Credit (ITC) claims accounted for 20 per cent. Non-reversal or wrongful availing of ITC contributed to 19 per cent of the cases.

Additionally, voluntary tax payments saw a notable increase, with Rs 26,605 crore paid during 2023-24, up from Rs 20,713 crore in the previous fiscal.

The sharp rise in tax evasion, particularly in the online gaming space, underscores the need for stricter compliance and monitoring of offshore platforms operating in India.