The Income Tax (I-T) department has issued show cause notices to seven online gaming companies and about three dozen high-value players active on their portals, The Economic Times reported citing officials with knowledge of the matter. The possible tax evasion in these cases could be to the tune of Rs 28,000 crore.

Earlier this week, the income tax department started issuing notices to individuals who had played and won online games. According to CBDT Chief Nitin Gupta, in the last three years Rs 58,000 crore worth of prize money was won by users playing online games.

The department has started alerting the winners on the tax compliance dashboard wherever there is a mismatch in income and tax payments. 

"We have mounted an action in this (online gaming) sector and determined that Rs 58,000 crore winnings were there in last 3 years. The data is with us. We are in the process of issuing notices," Gupta said. 

He said the notices are being put up on the tax compliance portal and winners are being nudged to pay due taxes. 

"They are expected to voluntarily comply to payment of taxes," Gupta said. 

He also said the department undertakes enforcement action wherever it finds that data is backed by evidences and in such cases notices are issued. 

The I-T department action comes close on the heels of the GST intelligence wing issuing a show cause notice earlier this month to a Bengaluru-based online gaming portal GamesKraft Technologies Pvt Ltd demanding Rs 21,000 crore in taxes, interest and penalty. 

GamesKraft has approached Karnataka High Court against the SCN issued to it by GST authorities.

The tax was calculated on the basis of 28 per cent Goods and Services Tax (GST) on online gaming. 

Currently, an 18 per cent GST is levied on online Games of skill, while a 28 per cent GST is levied on online games of chance.