Government Ramps Up Actions Against Illegal Offshore Betting Services

The government is exploring stricter regulations to combat the proliferation of offshore platforms offering illegal gambling and betting services in India, including tighter rules for Unified Payments Interface (UPI) transfers.

This decision comes as numerous such platforms have emerged, prompting officials to consider measures to curb their activities more effectively.

The Indian government has uncovered a total of 114 illegal betting and gambling platforms in the country, primarily through domain farming, according to an ET report.

To address this issue, potential measures under consideration encompass the imposition of Tax Collection at Source (TCS) on UPI payments, proactive monitoring and blocking of unregistered online gaming companies, and the enforcement of a more rigorous verification process.

Illicit platforms are currently receiving UPI payments via proxy bank accounts, and the proposed Tax Collection at Source (TCS) would create a traceable money trail for potential investigation. It has been noted that funds accumulated in these proxy accounts are being transferred through illicit channels such as hawala, cryptocurrencies, and other unlawful means.

During a recent presentation to the revenue department, Indian domestic online gaming companies raised concerns about numerous offshore betting and gambling platforms. They provided detailed information on the illicit operations of these platforms within India.

Earlier in the year, India banned 138 offshore betting platforms. In an order issued on February 5, the Ministry of Home Affairs (MHA) directed the Ministry of Electronics and Information Technology (MeitY) to ban and block 232 apps that either originate or have links to China. Among these were 138 betting and 94 online lending apps.

The Directorate General of GST Intelligence (DGGI) issued notices to as many as 38 such platforms in April for allegedly laundering money and syphoning off taxes.

Over the past year, the MIB issued directives asking media entities, platforms and online advertisement intermediaries to refrain from carrying advertisements/promotional content of betting platforms, as well as to curb outdoor advertisements.

The GST Council, earlier this year, announced its decision to impose a 28% GST on the amount being paid at the entry level for online gaming. The move was part of the efforts of the governments, both state and central, to regulate online real-money gaming.

The Ministry of Finance last month notified October 1 as the appointed date for the amended provisions in Central GST and Integrated GST laws to come into effect. As per new rules, offshore platforms are also required to have GST registration to operate in India.

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