Allegations of Tax Evasion in India by Offshore Gambling Firms

As per the information provided, it appears that the companies being investigated for tax evasion amounting to Rs 23,000 crore (US$2.81 million) are not registered under the Goods and Services Tax (GST) system. GST is a consumption-based tax levied on the supply of goods and services in India, and businesses with a certain threshold of turnover are required to register under the GST regime and comply with its rules and regulations.

The investigation by GST officers suggests that these gaming companies may have evaded GST by not registering themselves under the GST system and not paying the appropriate taxes on their supplies of goods or services. Tax evasion is a serious offense and can result in legal consequences, including penalties, fines, and other legal actions.

It’s important for businesses to comply with the GST laws and regulations in India, including timely registration, filing of GST returns, and payment of appropriate taxes to avoid any legal implications and ensure smooth business operations. If found guilty of tax evasion, the companies could face severe consequences as per the applicable laws and regulations. It’s always advisable for businesses to seek professional tax advice and maintain accurate records of their transactions to comply with the GST requirements.

Tax authorities are actively pursuing offshore entities that offer online betting and gambling platforms to Indian residents through mobile apps, as these entities are in violation of the Goods and Services Tax (GST) law by not being registered as suppliers of Online Information Database Access and Retrieval (OIDAR) services and thus not paying GST.

According to a source, numerous offshore entities are generating income in India by providing online betting and gambling platforms, but they are not registered for GST. The Finance Ministry estimates that these gaming companies have evaded approximately INR 23,000 crore (US$2.81 million) in taxes between April 2019 and November 2022.

Serving notices to these offshore entities is challenging as they do not have a fixed location or physical presence in India. Additionally, some companies frequently change their overseas bank accounts, making it even more difficult to track them.

It is worth noting that the Foreign Exchange Management Act (FEMA) prohibits outward remittances for betting and gambling, and these activities can also be investigated by the Enforcement Directorate.