Online real money gaming firms on govt’s radar for money laundering, tax evasion possibilities

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A detailed examination of money flow to and from online real money gaming firms was recently conducted by top government authorities such as the Enforcement Directorate (ED), Income tax (IT), and GST departments, suggesting that these companies might be involved in illegal activities.

“The top government has conducted a detailed analysis of the sector highlighting, money laundering, tax evasion and terror financing being reported in the garb of online real money gaming in the country,” said a source to CNBC TV18.

The report further revealed that there are several online gaming companies which are evading GST and income tax by using offshore subsidiaries while still operating in India.

“It is also understood that online gaming companies in some cases may have restructured to move ownership abroad. There are also instances which shared that companies brought in cosmetic changes to names of games to enable money laundering,” the source added.

While the reports of money laundering and terror funding are generally linked to illegal offshore betting platforms, it is surprising that legitimate onshore online gaming companies are now being alleged to have the same links.

Meanwhile, the government, through the GST department and the ED, plans to investigate these companies further to determine if there are any possible links.

Online real money gaming firms are already facing heat on the taxation front. Not only do they have to pay increased GST but are also reeling from tax demand notices to the tune of thousands of crores which could lead many of them to bankruptcy.

Most of the online gaming companies have resorted to legal action as they believe that the GST notices are on a retrospective basis which is uncalled for and do not have any legal basis. Some of the companies have already challenged the notices in various High Courts.

In a recent development on this front, the Centre will reportedly be asking the Supreme Court to bring all the GST cases together in order to save time and resources of all parties.