In the Indian Online Gaming Space, DGGI Discovered Tax Evasion of INR 81,875 Crore in FY24

Nitin Konde, Apoorva Bajj

Sep 17, 2024 — 2 min read

In the Indian Online Gaming Space, DGGI Discovered Tax Evasion of INR 81,875 Crore in FY24

A total of 78 instances were investigated by the Directorate General of GST Intelligence (DGGI), which is the central investigative and anti-evasion arm of the finance ministry. The DGGI discovered the highest-ever goods and services tax (GST) evasion by the online money gambling industry, which amounted to INR 81,875 crore in FY24.

The Directorate General of Income Tax (DGGI) stated in its most recent annual report that it discovered a record 6,084 instances of tax evasion in 2023-24, involving INR 2.01 trillion in GST. This figure is twice as high as the INR 1.01 trillion that was discovered in FY23 over 4,872 cases.

There 46% of the incidents of tax evasion were related to the non-payment of taxes through clandestine supply and undervaluation, 20% involved fraudulent Input Tax Credit (ITC) claims, and 19% pertained to incorrect ITC claims or refusal to reverse them. These figures were noted in the report.

Similar Cases Were Witnessed in Other Sectors

The Banking, Financial Services, and Insurance (BFSI) sector came in second place, with a total of INR18,961 crore being evaded over 171 cases. Additionally, the pharmaceutical industry (22 cases, INR 40 crore) and works contract services (343 cases, INR 2,846 crore) were among the other industries under consideration.

Moreover, during the fiscal year 24 (FY24), there were 1,976 instances of GST evasion that were discovered in the iron, copper, scrap, and alloys industries, with a total value of INR 16,806 crore. The industries of pan masala, tobacco, cigarettes, and bidi came in third place in terms of evasion, with 212 instances totalling INR 5,794 crore. There were also other industries, such as plywood, lumber, and paper (238 instances, worth INR 1,196 crore), electrical devices (23 cases, worth INR 1,165 crore), and marble, granite, and tiles (235 cases, worth INR 315 crore).

Announcement to Form Inter-Departmental Committee

In addition, the DGGI report suggested the establishment of an interdepartmental committee that would include representatives from the Enforcement Directorate, the Reserve Bank of India, tax authorities, and consumer affairs departments. The purpose of this committee would be to combat the proliferation of online gaming platforms and ensure compliance with regulatory requirements.

Consequently, the time has come to implement a multi-pronged strategy in order to address this area. Regulatory compliance, consumer protection, and national security are all topics that were discussed in the report that was only recently made public by the DGGI. The intelligence wing of the Goods and Services Tax (GST) has taken action against 118 domestic online gambling businesses and issued show-cause notifications to 34 taxpayers, involving a total tax amount of INR 1.1 trillion. These businesses had failed to pay the GST at the specified rate of 28%.