Goods and Service Tax officers have detected violations of GST law by offshore companies offering online gambling and betting platforms to Indian residents through mobile apps and are working on ways to tackle such modes of tax evasion, a report read.
As per the prescribed procedure, all offshore companies offering services in India are required to register as suppliers of Online Information Database Access and Retrieval (OIDAR) services under the GST law. It is said, there are many offshore companies providing platforms for online betting and gambling in India but are not
GST-registered and therefore are not paying the required GST. While many foreign institutions of higher learning that offer online courses in India are OIDAR registered, online betting, and gambling platforms are not provided by organisations that are GST registered. Such cases are being pursued, and we expect to include them in the GST net.
These online betting and gambling apps are available on Search engine Google Play Store for Android phone users and App Store for iOS users and can be freely downloaded.
The source said, these companies must pay GST because they are taking money and providing services within the nation. It is challenging to serve notices on these companies, however, as they do not have a stable establishment or a physical presence in India.
''Many of these entities frequently change their bank accounts maintained overseas and therefore tracing them is a serious matter. We are trying to bring such platforms in the tax net,'' the source said.
Also, the Foreign Exchange Management Act (FEMA) forbids sending money abroad to bet or gamble, and the Enforcement Directorate may look into such activities.
Gaming companies are being investigated by GST inspectors for allegedly evading taxes by nearly Rs 23,000 crore between April 2019 and November 2022, according to a written response provided by the Finance Ministry in Parliament in December of last year.
The Enforcement Directorate has also attached criminal proceeds totaling more than Rs 1,000 crore in a number of cases involving cyber and cryptocurrency crimes, in which online gambling and other activities were employed to divert the gains.
In the meantime, the Ministry of Electronics and Inormation Technology announced regulations for the internet gaming industry earlier this month, outright banning any games that involve betting or wagering.
The internet gaming industry will operate under a self-regulatory paradigm and will initially alert three self-regulatory organisations (SROs) to the games that can legally be played in the nation.
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