New Delhi - The Goods and Services Tax (GST) Council in India is expected to propose a block on online gaming services that do not comply with Indian tax laws. The move comes as concerns rise over the use of digital platforms for money laundering and tax evasion.
On July 11, the GST Council levied a 28% tax rate on online gaming, considering it a luxury rather than an essential service. However, there have been worries that some online gaming platforms might evade GST by operating from overseas.
To address this issue, tax administration will deduct GST from payment sources, simplifying the process of collecting taxes from overseas platforms. Tax authorities may also be empowered to block noncompliant overseas entities to prevent GST evasion if payments are made from India.
The proposed changes in laws are set to be discussed during the GST Council's upcoming meeting on Wednesday. The council, which comprises all state finance ministers and is headed by the Union finance minister, aims to strengthen tax enforcement and ensure compliance with tax regulations for online gaming platforms.
Additionally, the Indian government is taking steps to regulate and address potential issues related to online gaming and its associated financial transactions to prevent illegal activities such as money laundering and terror financing.
While the GST Council's mandate is limited to taxation, the Ministry of Electronics and Information Technology (MeitY) and other relevant ministries will be involved in regulating online gaming and its enforcement.
Furthermore, the finance ministry has highlighted four major trends in cybercrime, including the use of cryptocurrencies, international online betting platforms for money laundering and terror financing, lending apps, and mule accounts (bank accounts used for money laundering).
The move by the GST Council comes after a recent parliamentary committee report proposed the establishment of a centralised Cyber Protection Authority (CPA) to combat cybercrimes, including those related to online gaming platforms.