As per media reports, the Indian government is considering the formation of an inter-departmental committee to regulate online gaming platforms. This initiative aims to manage the rapid growth of these platforms and ensure they adhere to regulatory standards.
The proposed committee would include representatives from various departments, such as the Enforcement Directorate (ED), Reserve Bank of India (RBI), tax authorities, and the consumer affairs department, according to the Directorate General of GST Intelligence (DGGI).
Regulatory Enforcement Against Non-Compliance
In related news, the Central Board of Indirect Taxes and Customs (CBIC) has initiated action against 118 domestic online gaming entities for non-compliance with GST regulations. Show cause notices have been issued to 34 taxpayers, involving a tax amount of Rs1,10,531.91 crore, due to their failure to pay GST at the mandated rate of 28 per cent. Additionally, the DGGI is investigating 658 offshore entities for non-registration or non-compliance and has recommended blocking 167 URLs and websites.
According to the DGGI's annual report for 2023-24, online money gaming is considered a ‘high-risk’ industry. The sector is prone to issues such as tax evasion, money laundering, cyber fraud, and juvenile delinquency. Despite legal clarity provided since October 1, 2023, which brings gaming entities under the tax net, enforcement remains challenging due to the opaque operations of offshore firms and their frequent changes in URLs and apps to evade taxes.
DGGI Proposes Multi-Pronged Regulatory Strategy
As per media sources, the DGGI has proposed a multi-pronged approach to regulate the online gaming sector. This would involve forming an inter-departmental committee with representatives from CBIC, CBDT, ED, MeITY, MCA, MIB, RBI, and the Department of Consumer Affairs.
The committee's role would be to develop strategies and regulations to ensure compliance, consumer protection, and national security amidst the rapid growth of online gaming platforms.
The online gaming industry has seen significant growth, with a compound annual growth rate (CAGR) of 28 per cent, reaching Rs 16,428 crore in FY23-24, as per media reports. This surge is attributed to factors like widespread smartphone usage, better internet connectivity, a growing youth population, and the rise of local gaming content.
