DGGI cracks down on illegal offshore gambling companies for Rs 12,000 crore GST evasion

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The Directorate General of GST Intelligence (DGGI) has started to crack down on several online betting and gambling platforms based out of Cyprus, Mauritius and Cayman Islands which are providing their services in India. Some of these illegal offshore betting websites are posing as fantasy gaming apps and are said to be helping high-net-worth individuals (HNIs) like celebrities and social media influencers launder money out of India.

According to tax officials, around 38 of these websites operating in India have been identified for not paying goods and services tax (GST). These websites are not registered in India and are accused of tax evasion amounting to Rs 12,000 crore in the period April 2019 – November 2022.

“While some of the companies were posing as platforms for fantasy games, they were meant purely for betting and gambling and users included HNIs, social media influencers and the amount was being deposited to their foreign account for which no income tax has been paid,” said an official to The Economic Times.

The official also said that other agencies have also been informed since the payments have been made through international cards and cryptocurrencies which is relatively harder to track.

“These companies will have to pay the outstanding tax and get GST registration, otherwise the tax department will write to the Ministry of Electronics & Information Technology (MeitY) to block their gaming sites,” he further added.

The Income Tax department is also looking into these companies and other major names stakeholders for possible tax evasion. Incidentally, many celebrities from the entertainment industry have been found to be associated with these offshore illegal betting websites.

“The biggest challenge is from the offshore online gaming companies. While the domestic industry is largely self-regulated, it still loses a substantial amount of revenue to these overseas players,” said Dibyojyoti Mainak, head of legal and policy at Mobile Premier League (MPL).

Meanwhile, the Central Board of Indirect Taxes and Customs has also begun investigations against some gaming companies located in India and abroad in relation to GST evasion of Rs 22,936 crore, the Finance Ministry informed the Parliament last month.