DGGI Finds INR 81,875 Cr Worth Tax Evaded in Indian Online Gaming Industry In FY24

In the fiscal year 2023-24 (FY24), the Directorate General of Goods and Services Tax Intelligence (DGGI) reportedly discovered tax evasion totaling INR 81,875 crore (78 instances) in the Indian online gaming sector.

According to the DGGI’s annual report for FY24, reviewed by news agency PTI, the online gaming arena was the most prone to tax evasion during the fiscal year under review, followed by the banking, financial services, and insurance (BFSI) sector, which saw 171 incidents of tax evasion worth INR 18,961 Cr.

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The development comes as tax officials continue to monitor the online gambling industry for possible avoidance. FY24 was the same fiscal year in which the GST Council established a 28% GST on real-money gaming.

In August 2023, the Centre modified both the Central Goods and Services Tax (Amendment) Bill, 2023, and the Integrated Goods and Services Tax (Amendment) Bill, 2023. The Parliament later approved these revisions. The revised rules then went into effect on October 1, 2023.

Following that, various Indian online gambling companies received warnings to pay INR 1.12 lakh crore in overdue taxes.

Following this, many platforms, including Gameskraft, Delta Corp, Head Digital Works, Games24x7, and Baazi Games, filed tax challenges in various courts.

Due to these tax demands, the Indian online gambling ecosystem appears to have suffered a setback. While many companies, including MPL and Spartan Poker, have laid off staff, others, such as Striker, have shut down.

According to a joint analysis released earlier this year by EY and the US-India Strategic Partnership Forum (USISPF), seven out of 12 surveyed enterprises saw revenue declines or stagnation following the Centre’s 28% GST regulations for online gaming platforms.

Even though the ecosystem has suffered, GST revenue from the domestic online gaming business increased 412% to INR 6,909 Cr in the first six months following the implementation of the 28% GST regime, compared to the previous six months.

Despite this, the Indian online gaming market continues to provide significant opportunities for both established and new players. According to social networking company Meta, India’s gaming business is expected to create $7.5 billion in revenue and 2.5 lakh jobs by 2025.