The Indian Ministry of Finance has granted new powers to the Directorate General of Goods and Services Tax Intelligence (DGGI) to begin blocking online gaming websites and mobile applications that illegally evade the country's Goods and Services Tax (GST).
This week's "Indian Gazette" confirmed that the new regulation SO 95(E) takes immediate effect. The department stated that this move aims to combat fraud under the Information Technology Act of 2000 and the Goods and Services Tax Act of 2017.
DGGI is an agency representing the GST Council responsible for reducing tax evasion and enforcing tax requirements.
Online real money gaming companies operating in India are required to pay a 28% business tax for skill games. This regulation was first implemented in October 2023 and was reaffirmed after a performance assessment of this tax measure on September 10 last year.
Operators must register under the simplified registration scheme of the IGST Act and designate a person residing in India to pay the GST contributions.
Users who do not comply with the regulations may be blocked by the country's websites and applications. Previously, blocking orders were submitted through the Ministry of Electronics and Information Technology. However, the new regulation allows DGGI to directly send removal notices to operators.
The order will also allow DGGI to identify websites involved in producing fake GST certificates. The organization will also monitor non-compliant tax evasion business applications and prevent fraudulent transactions using platforms like WhatsApp.
According to the new government order, the tax department will appoint an "Additional or Joint Director (Intelligence)" at DGGI headquarters as a key official. They will implement the provisions specified in Section 14A(3) of the Goods and Services Tax Act.
DGGI classifies online gambling as a high-risk industry
DGGI is headquartered in New Delhi, with 26 regional units and 40 district offices in major cities across India. The organization has extensive influence in India.
In September, the local newspaper "Business Standard" reported that DGGI has classified online gambling as a particularly concerning area in its annual report for the fiscal year 2024. The report stated that the industry poses "high risks" of tax evasion, money laundering, and cyber fraud.
In the fiscal year 2024, DGGI reported only 78 cases of tax evasion, amounting to a staggering 81,875 crore rupees (7.64 billion pounds/9.22 billion euros/9.54 billion dollars).
Last October, the Digital India Foundation (DIF) warned that online gaming involves issues such as fraud, money laundering, and terrorism financing. Subsequently, the rules have changed. A report by DIF found that the industry lacks the capability to prevent fraud and money laundering.
