Hyderabad: The Directorate General of GST Intelligence (DGGI), Hyderabad Zone, uncovered a ₹5,000 crore tax evasion racket linked to online gaming and betting apps disguised as technology service platforms.
Following a tip-off, DGGI officials launched coordinated raids in Hyderabad, Mumbai, and Delhi. The investigation revealed an interstate syndicate that used shell companies, foreign servers, and fake invoices to evade the 28% GST applicable on real-money gaming.
Subheading: GST scam online gaming syndicate used shell firms, foreign servers
Officials identified Y.S. Prabhu Kumar from Mumbai and Rajasekhar Reddy from Hyderabad as key suspects. They allegedly operated gaming and betting apps while misclassifying them as tech platforms to avoid GST.
The syndicate routed thousands of crores through a network of fake entities. Many had no GST registration or filed only token returns. Investigators suspect they routed payments via foreign servers to obscure transaction trails.
During the raids, officials seized hard drives and financial records. The documents are now under scrutiny to calculate exact GST dues. Investigators are also examining links to hawala operations possibly connected to the gaming funds.
Subheading: Online gaming GST rules tightened amid major bust
The scam surfaced shortly after the government tightened GST norms for online gaming. Under current rules, real-money games—whether skill-based or chance-based—attract 28% GST on the full deposit amount.
For example, if a user deposits ₹1,000, the platform owes ₹280 in tax. However, the accused allegedly used foreign branding and misclassification to claim exemption. Some platforms operated without any GST registration.
DGGI officials indicated that arrests are imminent. More individuals linked to the network may surface as the probe expands.