The Directorate General of GST Intelligence (DGGI) has issued notices to as many as 38 offshore gambling platforms for allegedly laundering money and syphoning off taxes.
According to an ET report, the initial investigation revealed that the entities in question were not based in India and were allowing many high-net-worth individuals (HNIs), including celebrities and social media influencers, to launder money abroad.
These 38 companies, which are primarily based in tax havens such as the Cayman Islands, Cyprus, and Mauritius, are also being investigated for allegedly failing to pay any goods and services tax (GST). Tax authorities have estimated that tax evasion will cost around INR 12,000 crore between April 2019 and November 2022.
A full-fledged investigation is underway in collaboration with the Income Tax Department, according to the report.
The tax authorities also noted a growing trend of tax evasion and cash laundering among these online betting and gambling websites masquerading as fantasy game platforms. According to the report, payments to these platforms were made using international cards and cryptocurrencies, making it difficult to trace the money trail’s origins.
“While some of the companies pretended to be fantasy game platforms, they were purely for betting and gambling, and users included HNIs, social media influencers, and the amount was being deposited to their foreign account for which no income tax was paid,” a tax official explained.
Indian authorities have also shared the data with other agencies around the world in order to track such users.
People familiar with the situation also stated that in order to operate in the country, these offshore entities will have to pay any outstanding taxes and register for GST. If these companies do not follow the rules, the tax authorities intend to write to the Ministry of Electronics and Information Technology (MeitY) to request that such gaming websites be blocked.
In addition to offshore betting platforms, the IT Department is investigating major gaming platforms in the country for possible tax evasion.