GST EVASION OF RS. 23,000 CR BY GAMING COMPANIES IN APRIL 2019-NOV 2022 PERIOD BEING INVESTIGATED

GST evasion of about Rs 23,000 crore by gaming companies between April 2019 and November 2022 is being investigated by the tax officers, Minister of State for Finance Pankaj Chaudhary said on Monday. In a written reply to a question in the Lok Sabha, the minister said the Enforcement Directorate has attached proceeds of crime of more than Rs 1,000 crore in several cases related to Cyber and Crypto assets frauds wherein online gaming, etc have been used for siphoning the proceeds.

About evasion of Goods and Services Tax (GST), Chaudhary said Central Board of Indirect Taxes and Customs (CBIC) formations have initiated investigations against some gaming companies (including online gaming firms) located in India as well as abroad.

“The estimated evasion of GST by these companies works out of Rs 22,936 crore, relating to the period April 2019 to Nov. 2022,” he said.

Besides, the Directorate of Enforcement is investigating several cases related to Cyber and Crypto assets frauds wherein online gaming etc. have been used for siphoning the proceeds.

The questions were asked by YSR Congress MPs Vallabhaneni Balasouri and Lavu Sri Krishna Devarayalu. Both the leaders had also asked whether online gaming companies were not paying income tax and the Income Tax Department has issued notices to many gaming companies. To this, the minister said this information was not available, “since no specific identification code for online gaming entities is available in Income Tax Return”.

“The disclosure of information about specific taxpayer is prohibited except as provided under section 138 of the Income Tax Act, 1961,” he said.

The YSR Congress MPs also asked whether gaming companies have allegedly become routes to launder money. MoS Finance Pankaj Chaudhary said the Enforcement Directorate is investigating several cases related to cyber and crypto assets frauds wherein online gaming has been used for committing fraud and siphoning the proceeds generated thereof.

“In these cases, as on 06.12.2022, proceeds of crime of more than Rs 1,000 crore have been attached/seized/freezer under the provisions of Prevention of Money Laundering Act, 2002 (PMLA),” he said, adding that 10 Prosecution Complaints (PCs) including two supplementary PCs have been filed before the Special Court, PMLA.

Further, assets amounting to Rs 289.28 crore have been seized under section 37A of Foreign Exchange Management Act, 1999, the minister said.

When asked if the Income Tax Department has issued notices to many gaming companies for non-payment of tax, Chaudhary said the information is not available since no specific identification code for online gaming entities is available in Income Tax Return. Additionally, Chaudhary said that the Central Board of Indirect Taxes and Customs (CBIC) formations have initiated investigations against some gaming companies (including online gaming firms) located in India as well as abroad.