Cracking Down on Online Gaming Tax Evasion: Government's Multi-faceted Strategy

A DGGI report advocates creating an inter-departmental committee to curb the proliferation of online gaming platforms, ensure compliance, and tackle tax evasion. Action against 118 domestic gaming entities is ongoing, with significant tax notices issued. Challenges include offshore tax havens, dark web use, and legal ambiguities regarding game classification.

An inter-departmental committee, including representatives from the Enforcement Directorate, RBI, and tax and consumer affairs departments, may be set up to combat the rapid growth of online gaming platforms and ensure regulatory compliance, a recent DGGI report revealed.

The Central Board of Indirect Taxes and Customs' GST intelligence wing has initiated action against 118 domestic online gaming entities, issuing Show Cause Notices to 34 taxpayers for a tax amount totaling Rs 1,10,531.91 crore. These notices were issued due to non-payment of GST at the 28 percent rate.

Additionally, 658 offshore entities have been identified as non-compliant and are under investigation. The DGGI has recommended blocking 167 URLs/websites. The 2023-24 annual report labeled the online gaming industry as 'high-risk' for tax evasion and other socio-economic problems.

(With inputs from agencies.)