Reports: CBDT to investigate offshore online gaming companies for tax evasion

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Offshore online gaming platforms that have been evading taxes from the Indian government are now being scrutinised. It has been reported by Business Today TV that the Central Board of Direct Taxes (CBDT) is planning to look into the matter and deal with the issue.

“We have observed that many offshore apps are generating huge business, but the commensurate amount of tax is not being paid. We are looking into this,” a finance ministry official said.

Data on possible tax evasion by online gambling companies is being gathered by the income tax department. Games Kraft Technology Pvt Ltd was recently issued a show cause notice by the Bengaluru branch of the GST Intelligence wing for an alleged Rs 21,000 crore tax evasion.

The sources also told Business Today TV that the Income Tax department may be chasing a much higher amount of alleged tax evasion of around Rs 60,000 crore by the offshore online gaming platforms.

Currently, the Ministry of Electronics, Information, and Technology is working together with government taxmen to impose restrictions on some online gaming apps. In order to maintain a compliance-based registration system in the future, the government is also seeking to create a separate regulatory organization and to require registration for new online gambling companies.

Earlier in August this year, the CBDT had urged the winners of online games to file updated income tax returns (ITRs), disclose their incomes and pay the applicable taxes. The tax department also conducted some raids on these online gaming companies after allegations of tax evasion and suppression of income.

The government also came up with a new provision in the Income Tax Act, 1961. According to this new provision the taxpayer can file the updated return after the relevant assessment year but within 24 months.

The income tax department have said that after the introduction of the new provision they have collected around Rs 28 crore in taxes after about 1 lakh returns were filed by the taxpayers.