An officer from the Directorate General of GST Intelligence (DGGI) headquarters can now send takedown notices to intermediaries to block online money gaming apps and websites that evade Goods and Services Tax (GST) under Section 79(3)(b) of the Information Technology Act, the government said in a notification on Monday.
The department of revenue has appointed an additional or joint director (intelligence) at the DGGI headquarters as the nodal officer for this purpose.
“In pursuance of clause (b) of sub-section (3) of section 79 of the Information Technology Act, 2000 (21 of 2000) read 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 designates the Additional/ Joint Director (Intelligence) of Directorate General of GST Intelligence Headquarters (DGGI-Hq), Central Board of Indirect Taxes and Customs in Department of Revenue, Ministry of Finance, as the nodal officer for the purposes of the said rules in respect to section 14A(3) of Integrated Goods and Services Tax Act, 2017 (13 of 2017),” the notification read.
Section 14A of the Integrated Goods and Services Tax Act requires offshore online money gaming companies that offer their services in India to pay GST by registering under the Simplified Registration Scheme of the IGST Act and appointing a person within India to pay such taxes. Under section 14A(3), failure to comply with these provisions could result in these websites and apps getting blocked under Section 69A of the Information Technology Act, for which the blocking order needs to be routed through the IT ministry.
Now, however, the DGGI can directly send takedown notices.
For the purpose of GST, ‘online money gaming’ refers to any game where players deposit money with the expectation of winning. It includes both games of skill and chance, and both permissible and illegal games.
In its annual report for FY24, the DGGI had flagged the sector as a “high-risk” sector for tax evasion, money laundering, cyber fraud and juvenile delinquency. It had reported that the online money gaming industry, across 78 cases, had evaded GST amounting to ₹81,875 crore, the highest for any sector in the financial year.
Gaming entities attract 28% GST on the total sum deposited by players. Most online money gaming apps and websites that offer games of chance (betting, gambling) are not headquartered in India, but in tax havens such as Curacao Islands, British Virgin Islands, Malta, etc.
In December, minister of state for finance Pankaj Chaudhary had informed the Lok Sabha that until then, the DGGI had identified 642 offshore entities for investigation.