DGGI identified a ₹70,000 crore illicit betting ecosystem using shell companies to route funds. To combat this, the tax intelligence unit wants payment firms to record the originating website for every transaction. This proposal faces a significant hurdle since most digital payments, including those by betting operators, originate in apps or via QR codes, not websites.
How We Got Here
A 14-month DGGI investigation uncovered an estimated ₹70,000 crore illicit betting ecosystem using intermediary shell companies. The proposal to mandate originating website recording was sent to the CBIC in August, then to the Department of Revenue.
The Numbers
- The recommendation seeks to link gaming sites, which users bet on, to the shell companies collecting payments.
- The measure is described as applicable beyond gaming violations, covering "other illicit activity," making it a general surveillance capability.
- Current payment aggregators process requests based on merchant IDs, not by inspecting the user's originating browsing session.
- A large share of Indian payments, including UPI intent calls, QR codes, and in-app checkouts, do not begin on a website.
- Legitimate commerce often separates the user's originating site from the merchant of record, like marketplaces or SaaS billing pages.
What Happens Next
🇮🇳 Why This Matters for India
For fintech founders and product managers in Bangalore and Pune, this proposal means a costly re-architecture of payment flows and potential regulatory overreach beyond betting.
The Take
This proposal fundamentally misunderstands how most Indian digital payments work, especially in the app economy. The real danger here isn't catching betting operators, it's the broad surveillance capability it would create for any enforcement agency, irrespective of original intent.
Source:
MediaNama ↗