ED launches investigation into gaming companies for evading GST of over Rs 20,000 crore – NewsNaija.com.ng

The Enforcement Directorate (ED) has reportedly launched an investigation into gaming companies for evasion of GST of approximately Rs 23,000 Cr. This is an important development within India’s nascent gaming industry, as the Minister of State Finance, Pankaj Chaudhary, confirmed that tax officials are now investigating this massive GST evasion.

It is implied that several online gaming companies are implicated in this investigation. The indictment is about the use of online gaming to siphon profits from various cases related to cyber and crypto asset fraud.

“The estimated GST evasion by these companies is Rs 22,936 crore, relative to the period of April 2019 to November 2022,” said Pankaj Chaudhary. It was also confirmed that assets worth Rs 289.28 crore have been seized under section 37A of the Currency Management Act 1999.

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Online gaming companies in India and abroad implicated in GST evasion

Reports suggest that the Ministry of Finance has launched investigations against some gaming companies located in India and abroad. The estimated GST evasion, Rs 23,000 crores, was accumulated from April 2019 to November 2022, as confirmed by Pankaj Chaudhary.

The Minister of State for Finance responded to questions raised in Lok Sabha and replied as follows:

“CBIC (Central Board of Excise and Customs) formations have launched investigations against some gaming companies (including online gaming companies) located in India and abroad,” said MoS Pankaj Chaudhary. “The estimated GST evasion by these companies is calculated at Rs 22936 crore, related to the period of April 2019 to November 2022.”

There were questions raised in the Lok Sabha with concerns about whether gaming companies have allegedly become routes to launder money. “In these cases, as of 12.06.2022, criminal proceeds of more than Rs 1000 crore have been garnished/seized/frozen under the provisions of the Prevention of Money Laundering Act 2002 (PMLA)”, added MoSS Pankaj Chaudhary. In addition, he explained that 10 Complaints of the Prosecutor’s Office (PC), including two complementary PCs, have been filed with the Special Court, PMLA.

The specific companies have yet to be named as disclosure of specific taxpayers is prohibited except as provided under section 128 of the Income Tax Act 1961. There is a good chance that the final results of the investigation disclose the specific companies involved in this investigation.

As things currently stand, there is not much information available about the companies involved in GST evasion. It will be interesting to see the results of the investigation and the further ripple effect it will have throughout the country’s gaming industry. The numbers involved in the investigation are quite significant, so it is very likely that there are several companies involved in this investigation.

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