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Online Gaming & Casinos emerged at the top in terms of detection of GST evasion during Fiscal Year 2023-24, annual data compiled by the Directorate General of GST Intelligence (DGGI) showed. This sector alone accounted for more than 40 per cent of the amount involved in GST evasion detection
DGGI detected over 6,074 cases involving evasion of duty of over ₹2.01 lakh crore. “It is approximately 10 per cent of total GST collection in the current FY with a voluntary payment of ₹26,598 crore which has contributed about 1.4 per cent of total GST Collections for FY 2023-24. Further 147 masterminds and other offenders involved in GST evasion were arrested,” a note prepared by DGGI, as seen by businessine, revealed.
Among the sectors, a considerable amount of tax evasion has been detected in major sectors like Online Gaming & Casino (₹83,588 crore), Co-insurance/ Re-insurance (₹16,305 crore), and Secondment (₹1,064 crore), the note said. “DGGI also initiated investigation in respect of offshore online gaming entities wherein entities that do not comply with GST law are being identified and scrutinized for necessary action as per law,” the note added.
All these have come into light at a time when the Supreme Court directed the transfer of 27 writ petitions filed by Online Gaming Companies in various High Courts to itself. These companies are fighting a legal battle against GST notices by DGGI. The matter will be taken up next month.
In December, the Finance Ministry informed the Rajya Sabha that 71 show-cause notices involving GST to the tune of over ₹1.12-lakh crore were issued to online gaming companies during financial years 2022-23 and 2023-24 (up to October 2023). “As these notices are pending adjudication, the respective GST demand is not yet determined under the provisions of CGST Act, 2017,” Minister of State in Finance Ministry Pankaj Chaudhary had said in a written reply.
GST on online gaming has been a contentious issue. Earlier, online gaming companies supplying actionable claims were levying GST at the rate of 18 per cent on platform fees ranging from 5-20 per cent of the full-face value, disputing the 28 per cent levy on actionable claims in the form of betting and gambling supplied in online gaming before various legal fora. However, the GST Council, in its meeting dated July 11 last year, recommended that actionable claims supplied in casino, horse racing, and online gaming are leviable to a GST rate of 28 per cent and recommended to carry out amendments in the law to remove any ambiguity.
In the 51st GST Council meeting held on August 2, a few States requested that the matter be reconsidered, and after a detailed discussion, the GST Council decided to continue with its earlier recommendation. Later a law was amended and then there was a spurt in the issuance of show-cause notices. Though the government said that amendments in law are clarificatory in nature and it has always maintained that a 28 per cent rate is applicable from July 1, 2017, online gaming companies have alleged that an amendment in law is retrospective in nature and accordingly show cause notices have been issued.
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