Online Gaming Platforms Blocked: Tax Crackdown Begins
In a major move to curb illegal offshore betting and online gambling, the Indian government has blocked 1,524 online gaming platforms. The Ministry of Electronics and IT took this action after receiving requests from the Central Board of Indirect Taxes and Customs (CBIC) and the Directorate General of GST Intelligence (DGGI). These platforms were found operating without GST registration and violating tax laws in India.
Let’s break down the tax angle, government action, and what it means for players and platforms.
Why Were These Online Gaming Platforms Blocked?
According to MoS Finance Pankaj Chaudhary’s reply in Lok Sabha (22 July 2025):
- The blocked platforms are hosted offshore, targeting Indian users.
- Many operated without permanent establishment or GST registration.
- They failed to pay GST or comply with TDS under Section 194BA of the Income-tax Act.
- This violates multiple provisions under CGST Act, FEMA, and IT laws.
Key Tax Provisions Targeting Online Gaming
1. TDS under Section 194BA (Effective 1 April 2023)
- TDS at 30% on net winnings from online games.
- Applies regardless of withdrawal – based on game account balance.
- Non-deduction leads to interest, penalty, and prosecution.
2. GST on Online Gaming
- From 1 October 2023, GST @28% is applicable on:
- Full value of bets placed.
- Whether skill-based or chance-based game.
- Platforms must be registered in India, even if hosted abroad (Rule 64B, CGST Rules).
Government Clarifications & Legal Push
- CBIC Guidelines mandate overseas gaming firms to obtain GST registration under Section 14 of IGST Act.
- Failure to register or pay GST is treated as tax evasion.
- Gameskraft Case pending before Supreme Court involves retrospective ₹21,000+ crore GST demand on online Rummy – final verdict will define future tax treatment.
Recent Government Action: At a Glance
| Particulars | Details |
|---|---|
| Platforms Blocked | 1,524 |
| Reason | Illegal operations, GST evasion, no TDS |
| Authority Involved | CBIC, DGGI, MeitY |
| Legal Tools Used | IT Act, CGST Act, FEMA |
| International Domain Hosting | Yes (mostly in Curaçao, Malta, etc.) |
| Amount of GST Detected in FY 23-24 | ₹1,058 crore from 14 entities |
| Platforms Voluntarily Registered Since | 7 offshore platforms registered post-notice |
Expert View: What Should Indian Gaming Startups Watch Out For?
Tax expert tip:
Even if your platform is hosted abroad, targeting Indian players makes you liable under Indian GST and TDS laws. Register under NONGSTIN (Rule 64B) and comply with TDS under 194BA to avoid penal action.
What Happens to Players?
- No TDS credit for users if the platform hasn’t complied.
- Winnings may be taxed twice — once while withdrawing and again if not properly reported.
- Safer to play on domestic platforms that deduct TDS and issue statements.
FAQ: Offshore Online Gaming and Indian Tax Laws
Q1. Can offshore platforms avoid Indian taxes?
No. If they offer services to Indian users, they must comply with GST and TDS norms.
Q2. What is the penalty for non-compliance with TDS u/s 194BA?
30% tax plus penalty under Section 271C, and prosecution under Section 276B.
Q3. Do players face legal risk?
No direct penalty on players yet, but they must disclose winnings in ITR.
Q4. What if I’ve played on a blocked platform?
Declare any winnings in ITR. Use a trusted domestic platform going forward.
Conclusion
The government’s blocking of 1,524 offshore gaming sites signals a zero-tolerance stance on tax evasion in the online gaming sector. Platforms must register, deduct TDS, pay GST, and report transactions transparently. Players, too, must ensure they report winnings and play on compliant platforms.
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Summary:
India blocks 1,524 offshore gaming sites for tax evasion. GST @28% and TDS @30% now apply to all online gaming platforms targeting Indian users. Strict compliance enforced under CGST and Income-tax laws.