The CBIC is investigating gaming companies, including online gaming companies, for GST evasion of INR 22,936 Cr
The government said that necessary action has been initiated against online gaming companies for committing crypto-related frauds under the law
Assets worth INR 289.28 Cr also seized under various sections of FEMA for perpetuating crypto-related online gaming frauds
The Central Board of Indirect Taxes and Customs (CBIC) is investigating gaming companies for alleged GST evasion of nearly INR 23,000 Cr, the government informed the Parliament.
The companies under scrutiny also include online gaming companies located in the country as well as abroad, Minister of State (MoS) for Finance Pankaj Chaudhary said.
“In so far as evasion of Goods and Services Tax (GST) is concerned, CBIC formations have initiated investigations against some gaming companies (including online gaming companies) located in India as well as abroad. The estimated evasion of GST by these companies works out of (to) INR 22,936 Cr, relating to (the) period April 2019 to Nov. 2022,” Chaudhary said in a written reply in the Lok Sabha.
Without disclosing the name of the erring parties, the MoS also said that the Enforcement Directorate has so far frozen more than INR 1,000 Cr in proceeds in connection with cryptocurrency and cyber-related frauds involving online gaming platforms.
He added that the necessary action has been initiated against online gaming companies for committing crypto-related frauds under various provisions of the law, including the PMLA.
Elaborating on this, Chaudhary said that as many as 10 prosecution complaints, including two supplementary prosecution complaints, have so far been lodged before a Special PMLA Court. Additionally, assets worth INR 289.28 Cr have also been seized under various sections of the Foreign Exchange Management Act (FEMA).
He also specified that there is no information available with regards to income tax paid by online gaming companies owing to no specific identification code available for such entities in Income Tax Return.
The government apprised the Parliament of the numbers amidst rising instances of crypto-related frauds involving online gaming startups. A case in point has been the fraudulent gaming app called E-nuggets which is under the scanner for laundering money and cheating users. The ED has so far seized an amount of INR 68.42 Cr and cryptocurrencies worth crores in the case so far.
What has been striking is the hand of Chinese nationals in many of these scams. Along with elaborate digital lending and cryptocurrency-related scams, the digital arena has become a new hunting ground for cybercriminals.
The result has been a major uptick in online frauds which have scammed thousands of people of their life savings.
The disclosure also comes at a time when the Indian online gaming space is witnessing hectic developments. Earlier this month, it was reported that Amazon was close to launching its Prime Gaming subscription service in the country.
The Centre is also trying to regulate the space as more and more users trickle to online gaming platforms. A Group of Ministers (GoM) is reportedly expected to recommend imposition of a uniform GST of 28% on online gaming, while the union government is also mulling a national framework for online gaming platforms.
The Indian online gaming startups have grown manifold in the past few years likely on the back of rising internet and smartphone penetration as well as users looking for newer modes of enjoyment online. As a result, the country has seen an explosion of gaming startups in the past few years including listed firm Nazara Technologies. The industry has also minted multiple ew unicorns such as Games24x7, Dream11, Mobile Premier League, among others.
There is also a raging debate about online gambling platforms which fall under the purview of the space. With many states lobbying for further regulation of the space, many players are facing the heat as they look to scale their offerings.
Despite this, the gaming industry is booming and is expected to reach a size of $5 Bn by 2025 in the country. According to Inc42, the number of online gamers in the country is expected to zoom to 657 Mn by 2025 from 481 Mn in 2022.
