30 Oct 2022 faisan

How Online Betting Platforms are evading taxes, hitting India’s economy

With the commencement of the ICC T20 World Cup in Australia, the cricketing fans are glued to their TV sets. Punctuating the overs are advertisements of various betting and online gaming apps which are mostly endorsed by our favourite cricketers and TV/movie actors. Such advertisements are all over the digital platforms, social media etc in today’s generation but there’s a red flag.

These applications are mostly operated from outside the country and are therefore involved in tax evasion. The revenue department of India is in talks with the Ministry of Electronics and Information Technology to ban these offshore betting apps. Recently they shared a list of such apps including 1XBET, Pari Match, Dafabet etc.

The Directorate General of GST Intelligence, Income Tax department and Enforcement Directorate are having a close look at these foreign applications as reported by Zee News India. They are keeping a watch on their operations and the sort of revenue these applications are generating.

The Online Betting & Gambling Industry is valued at $2 billion dollars in India right now. Right now, ‘Games of Chance’ are taxed at 18% GST while ‘Game of Skill’ are taxed at 28% GST. Hence, such apps generate a revenue of almost $40-50 crore. However, a significant part of it never lands in the hands of the national treasury.

It is estimated that the offshore gaming platforms are making the Online gaming industry poorer by almost $25-30 billion. Most of these offshore gaming platforms including Pari Match, 1XBET, Dafabet operate from Malta, Curacao, Belize, Gibraltar and Isle of Man that have loose tax regulations, thus enabling them to evade the taxes in India.

Although these companies have India connections but the owners are based out of India. Although the Indian government has already banned advertisements of these offshore gambling firms, these companies make use of the sports and entertainment media to promote their business in the country.

As per Zee News India, these companies earn more than INR 5,000 crores per month in India. They are easily able to book their spaces on TV, OTT and digital platforms. These companies have also opened news websites tied up with teams as sponsors where their logos appear on team jerseys and flooded top websites with clickable banners.

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