GST Evasion Exposed: Real Cash Gaming Sector Takes the Top Spot in Tax Avoidance
India’s GST Evasion List Topped by Online Gaming Sector
The Directorate General of GST Intelligence (DGGI) has identified the real money online gaming sector as the top offender in its Goods and Services Tax (GST) evasion list, with a staggering haul of around Rs 1.10 lakh crore. This includes show cause notices against 34 taxpayers, action against 118 state agencies, and 658 foreign entities.
According to the DGGI’s annual report, online gaming is one of the most challenging sectors for offshore entities based in tax havens. The report highlights that gaming companies face difficulties in obtaining tax benefits due to the use of dark web and VPN-based platforms.
The DGGI has recommended blocking 167 URLs and websites to curb tax evasion. Many gaming companies are incorporated in offshore tax havens, making it difficult to determine ultimate ownership. These companies frequently change their URLs and apps to avoid tax compliance.
To address this issue, the DGGI suggests a multi-agency approach. An inter-departmental committee comprising various government agencies and industry bodies could be created to develop a comprehensive strategy and regulations to curb the proliferation of these platforms and ensure regulatory compliance, consumer protection, and national security.
Raising awareness and education of digital citizens on safe and responsible gaming practices, encouraging the use of legitimate Meity registration platforms, and entering into bilateral agreements with foreign governments for information sharing and tax compliance can also help achieve regulatory compliance.
Tax Evasion Detected by DGGI Over the Past Six Years
| Fiscal Year | Cases | Amount (in millions of rupees) | Voluntary Payments (in millions of rupees) |
|---|---|---|---|
| 2017-18 | 136 | 7,879 | 7,438 |
| 2018-19 | 1,539 | 19,319 | 8,687 |
| 2019-20 | 2,466 | 21,739 | 13,065 |
| 2021-22 | 3,828 | 31,908 | 10,630 |
| 2022-23 | 4,872 | 101,354 | 20,713 |
| 2023-24 | 6,064 | 201,851 | 26,605 |
Sectors with a Tendency to Avoid in FY2024 (in crores)
- Real Cash Games: 81,875
- Finance Banking & Insurance: 18,971
- Employment contracts: 2,846
Case Classification
- Fake ITC: 20%
- Non-payment of taxes (including secret supply, undervaluation, etc.): 46%
- Non-payment of taxes according to RCM: 5%
- Incorrect Utilization/Cancellation of Purchase Tax Credit/Blocked Credit: 19%
- Others: 10%
Tax Evasion Detected by City
| City | Cases | Amount (Rs. Million) |
|---|---|---|
| Bombay | 388 | 70,985 |
| Delhi | 181 | 18,313 |
| Pune | 163 | 17,327 |
| Gurgaon | 579 | 15,505 |
| Ahmedabad | 408 | 10,587 |
| Hyderabad | 145 | 11,081 |