DGGI Unleashes Power: Targeting Online Gaming Apps Skirting GST with Takedown Orders!

The revenue department has designated an additional or joint director (intelligence) at the DGGI headquarters as the key officer for this role.

“In accordance with clause (b) of sub-section (3) of section 79 of the Information Technology Act, 2000 (21 of 2000) in conjunction with clause (d) of sub-rule (1) of rule 3 of the Information Technology (Guidelines for Intermediaries and Digital Media Ethics Code) Rules, 2021, the Central Government hereby appoints the Additional/ Joint Director (Intelligence) of Directorate General of GST Intelligence Headquarters (DGGI-Hq), Central Board of Indirect Taxes and Customs within the Department of Revenue, Ministry of Finance, as the designated officer for the purposes of the mentioned rules concerning section 14A(3) of Integrated Goods and Services Tax Act, 2017 (13 of 2017),” as per the notification.

Section 14A of the Integrated Goods and Services Tax Act mandates offshore online money gaming companies that provide their services in India to remit GST by registering under the Simplified Registration Scheme of the IGST Act and designating a representative within India to fulfill such tax obligations. According to section 14A(3), non-compliance with these regulations may lead to the blocking of these websites and applications under Section 69A of the Information Technology Act, which requires the blocking directive to be channeled through the IT ministry.

However, the DGGI can now directly issue takedown notices.

For GST purposes, ‘online money gaming’ pertains to any game in which players deposit funds with the hope of winning. This encompasses both games of skill and chance, including both allowed and prohibited games.

In its annual report for FY24, the DGGI identified the sector as a “high-risk” area for tax evasion, money laundering, cyber fraud, and juvenile delinquency. It reported that the online money gaming industry, across 78 cases, had evaded GST amounting to ₹81,875 crore, the highest recorded for any sector in the financial year.

Gaming companies are subjected to a 28% GST on the total amount deposited by players. The majority of online money gaming applications and websites that offer games of chance (betting, gambling) are based outside India, located in tax havens such as Curacao Islands, British Virgin Islands, Malta, etc.

In December, the minister of state for finance, Pankaj Chaudhary, informed the Lok Sabha that up until that time, the DGGI had identified 642 offshore entities for inquiry.