India Targets Illegal Gaming Sites Amid Mobile Gaming Growth

India’s Ministry of Finance has granted new powers to the Directorate General of GST Intelligence (DGGI) to combat illegal online gaming platforms evading the Goods and Services Tax (GST). This new directive, outlined in regulation SO 95(E), was confirmed in the Gazette of India and is effective immediately.

The DGGI, responsible for curbing tax evasion under the GST Council, now has direct authority to block gaming websites and mobile applications avoiding their GST obligations. This regulation expands on measures previously enforced under the Information Technology Act 2000 and the GST Act 2017.

Online real-money gaming operators in India are required to pay a 28% turnover tax for skill-based games, a measure enforced since October 2023. Operators must register under the Simplified Registration Scheme of the IGST Act and appoint a local representative to handle GST payments. Non-compliance could lead to immediate website or app takedowns, now managed directly by the DGGI, bypassing earlier protocols requiring ministry intervention.

Additionally, the DGGI will monitor platforms issuing fake GST certificates, fraudulent transactions on apps, and misuse of services like WhatsApp for tax evasion. A newly appointed additional or joint director (intelligence) at DGGI headquarters will oversee the enforcement of Section 14A(3) of the GST Act.

The DGGI has flagged the online gaming sector as “high-risk” for tax evasion, money laundering, and cyber fraud. In its FY24 report, the agency revealed tax evasion of ₹81,875 crore (~$9.54 billion) across 78 cases in various industries, highlighting online gaming as a significant contributor.

These measures follow a 2024 warning from the Digital India Foundation (DIF) about risks like fraud, money laundering, and terrorism financing linked to online gaming platforms. The DIF report also identified gaps in the industry’s ability to prevent such crimes.

India’s gaming market is overwhelmingly mobile-first, with the majority of gamers relying on smartphones for access. According to a report by Mariusz Gąsiewski, CEE Mobile Gaming and Apps Lead at Google, mobile gaming drives both revenue and engagement in the country.

India leads the world in mobile game downloads, reflecting its immense player base. However, revenue growth now outpaces download rates, indicating a shift towards higher monetisation and more paying users. In 2024, mobile gaming in India generated $2.7 billion from in-app advertising, a figure projected to reach $4.4 billion by 2029.

In-app advertising dominates as the primary revenue source, far outpacing in-app purchases and subscriptions. The rise in smartphone adoption—projected to grow by an additional 300 million devices between 2024 and 2029—continues to fuel the mobile gaming market.

Certain gaming genres, such as board games, action, strategy, and puzzles, are gaining traction among Indian gamers. Meanwhile, casual and role-playing games are seeing slower growth, reflecting evolving player preferences.

However, challenges persist. Developers face difficulties in monetising high user engagement, and competition among domestic and international studios is intensifying. Funding, particularly for smaller studios, remains a hurdle despite lower development costs in India.

Regulatory uncertainty further complicates the landscape. Potential issues with taxation and restrictions on certain game types could discourage investment. Gąsiewski highlighted the importance of quality and localisation in attracting new users, as gamers’ expectations rise with market maturity.

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With its mobile-first gaming culture, India continues to dominate global download charts while evolving as a revenue-generating market. The government’s push to regulate and tax online gaming platforms reflects the sector’s rapid growth and challenges. Developers focusing on innovation, localisation, and monetisation strategies are well-positioned to benefit from this dynamic market.

Source:

India’s DGGI to block illegal gaming websites, igamingbusiness.com, January 2025.