The Director General of GST Intelligence (DGCI) has issued a takedown notice against six online gaming and gambling platforms to Google. This is due to their failure to register in India and payIntegrated Goods and Services Tax. The implicated platforms include MGM91.com, Shakunimama.com, Khelomama.com, 247majestic.com, Redgames1.com, and karabet.in.

These websites offer a range of games, such as online roulette, teen patti, and blackjack. So, authorities claim they provided these services without complying with tax regulations, despite accepting payments through various channels.

Legal Grounds and Security Concerns

The takedown notices were sent on August 1 under Section 79 (3) (b) of the Information Technology Act, in conjunction with Section 3 (1) (d) of the IT Rules, 2021, and Section 14 A (3) of the Integrated Goods and Services Tax Act, 2017. The DGCI cited security of the state as a reason for flagging these platforms.

According to the notice, the investigation found that the platforms offered online money gaming services to Indian users, making them liable to pay IGST. The authority has alleged that these entities also didn’t register themselves as per Indian tax laws. The notice directed access to these websites to be blocked within 36 hours. However, as of August 10, Moneycontrol was able to access them.

Broader Context: Government’s Stand on Online Gaming Taxation

The issue comes against the backdrop of the government’s firm stance on taxing the online gaming sector. On August 5, the Centre informed the Supreme Court that the entire stake amount, referred to as the “full face value of the bet,” should be considered for taxation in online gaming. 

In October 2023, the central government clarified that a 28% GST rate applies to entire bets. This policy has been a major point of contention within the gaming industry, arguing that it significantly increases the tax burden compared to previous models.

Implications for the Industry

The DGCI’s move signals stricter enforcement of tax compliance among offshore gaming platforms operating in India. By targeting unregistered entities and seeking swift blocking orders, authorities aim to curb tax evasion and regulate the rapidly growing online gaming market.

Industry stakeholders await further clarity on how such enforcement actions will be implemented and if additional platforms might face similar scrutiny.