The Directorate General of GST Intelligence (DGGI) uncovered an unprecedented Rs 81,875 crore in Goods and Services Tax (GST) evasion by the online gaming industry in FY24. This marks the highest evasion detected in a single sector, part of the record-breaking Rs 2.01 lakh crore GST evasion detected across 6,084 cases during the fiscal year. The total evasion in FY24 doubled compared to Rs 1.01 lakh crore in FY23.
Online gaming has emerged as the biggest contributor to tax evasion, with Rs 81,875 crore uncovered in 78 cases. The DGGI initiated action against 118 domestic gaming platforms, issuing show-cause notices for unpaid GST totalling Rs 1.1 lakh crore. Offshore entities also came under scrutiny, with 658 platforms flagged for non-compliance. To counter this, the DGGI recommended blocking 167 gaming websites linked to foreign tax havens like Malta and the British Virgin Islands.
The report highlighted the need for a multi-agency task force, including the Enforcement Directorate and RBI, to regulate the fast-growing online gaming sector, which faces issues ranging from tax evasion to money laundering.
Beyond gaming, the BFSI (banking, financial services, and insurance) sector saw the second-highest evasion, with Rs 18,961 crore detected across 171 cases. The iron, copper, and scrap industries were implicated in 1,976 cases, involving Rs 16,806 crore, while the pan masala and tobacco sectors accounted for Rs 5,794 crore.
Fraudulent Input Tax Credit (ITC) claims were a significant issue, making up 20% of cases, while 46% involved non-payment of taxes through undervaluation or clandestine supply of goods and services.
Broader crackdown
The DGGI’s nationwide drive against GST evasion extended beyond gaming. Since 2020, the agency has uncovered Rs 1.2 lakh crore in fake ITC claims. It has flagged around 59,000 suspicious firms and arrested 170 individuals in connection with fraudulent activities.
In August 2023, a special two-month drive was launched by both central and state governments to identify fake GST registrations and eliminate fraudulent entities from the tax system.
