If you are stuck in such a situation, here is what to do.

A gentleman, Mr. Kumar, has recently started generating income from his monetized account on a social media platform called “ClipVibe.” This application is currently banned in India. To access the platform and manage his account, Mr. Kumar uses a Virtual Private Network (VPN). The earnings from his content are processed through a global payment gateway, “GlobalPay,” which is fully KYC-compliant. This gateway converts the foreign currency into Indian Rupees (INR) and deposits the funds directly into his Indian bank account.

Mr. Kumar has not yet filed taxes on this income as the earnings are recent and fall within the current financial year. However, he fully intends to declare this income and pay all applicable taxes when the time comes. He is concerned about the potential legal ramifications of his activities. His primary concerns are whether earning from a banned app via a VPN is illegal, if using a KYC-verified payment channel legitimizes the income, and if he could face legal trouble despite his intention to be tax-compliant. He seeks to understand the legal risks involved to ensure he is not inadvertently breaking any Indian laws.

Advice in such cases

Navigating the legal landscape of online earnings, especially from sources that are in a grey area, requires careful consideration. Here is some general advice:

• Understand the Law: The primary issue is not the earning of money itself, but the method used to earn it. Accessing an application banned by the Indian government under the Information Technology Act, 2000, is a violation of a government directive.
• Tax Compliance is Separate: Remember that the obligation to pay tax on income is separate from the legality of the income’s source. The Income Tax Department requires you to declare all income, regardless of its origin. Paying tax does not make an illegal or prohibited activity legal.
• KYC is Not a Legal Shield: Using a KYC-verified account like GlobalPay or having funds transferred to a KYC-verified bank account only confirms your identity for financial tracking. It does not provide any legal sanction or approval for the underlying activity that generated the funds.
• VPN Usage: While using a VPN is not inherently illegal in India, using it to circumvent a government ban and access prohibited content or services can be considered a violation of the spirit and letter of the law.
• Preserve Records: Maintain clear and organized records of all transactions, communications, and earnings. This will be crucial if you need to explain the source of your funds to any authority.
• Consult with Lawyer: The very basic and important step to start is talk to Lawyer / advocate. You should not hesitate in paying his consultation fee i.e. might be in range of Rs. 10,000 to 50,000 depends case to case. He is helping you in this situation of come out. He is expert in the domain and can help you explain the procedure which you might have never explored. A good lawyer can get the issues resolved much faster than you think.

Applicable Sections of Law

Several Indian laws are relevant to this situation:

• Information Technology Act, 2000: Section 69A of the IT Act grants the Central Government the power to block public access to any information through any computer resource in the interest of the sovereignty and integrity of India, defence of India, security of the State, friendly relations with foreign states or public order. Circumventing such a ban can be seen as non-compliance with a government order.
• Foreign Exchange Management Act, 1999 (FEMA): Since the income originates from a foreign source, the transaction falls under the purview of FEMA. While receiving payments for services is generally permissible, if the underlying service or activity is deemed illegal or against public policy, it could attract scrutiny from the Enforcement Directorate (ED).
• Income Tax Act, 1961: This Act governs the taxation of all income earned by an Indian resident. The law mandates that income from any source, legal or illegal, must be declared and taxed appropriately. Failure to do so constitutes tax evasion.
• Bharatiya Nyaya Sanhita, 2023 (BNS): While less likely to be invoked for simple content creation, if the activities on the banned platform are linked to fraud, cheating, or acts prejudicial to national security, relevant sections of the BNS could be applied.

If you are the complainant

In this scenario, you are the person whose actions are under question, not a complainant. However, if you are facing an inquiry or investigation from a government agency regarding your earnings, here is what you should do:

• Do Not Panic: Stay calm and gather all relevant documents, including bank statements, payment gateway transaction histories, and any communication related to your work on the platform.
• Avoid Making Statements: Do not provide any written or verbal statements to authorities without legal guidance. Anything you say can be used against you.
• Do Not Alter or Delete Evidence: Do not attempt to delete your account, transaction records, or any digital footprint related to the activity. This can be viewed as destruction of evidence and can worsen your legal position.
• Consult with Lawyer: The very basic and important step to start is talk to Lawyer / advocate. You should not hesitate in paying his consultation fee i.e. might be in range of Rs. 10,000 to 50,000 depends case to case. He is helping you in this situation of come out. He is expert in the domain and can help you explain the procedure which you might have never explored. A good lawyer can get the issues resolved much faster than you think. He will represent you and handle all communications with the authorities.

If you are the victim

While you are not a “victim” in the traditional sense, you could become a victim of legal consequences due to a lack of awareness. If you find yourself in this position, your primary goal is to mitigate the potential damage.

• Assess the Situation Objectively: Understand that ignorance of the law is not considered a valid defense. Your actions, even if unintentional, have legal consequences.
• Seek Professional Guidance: The risks involve potential penalties under the IT Act and FEMA. The consequences can range from financial penalties to more severe actions depending on the nature of the investigation.
• Voluntary Disclosure: In some cases, and only upon expert legal advice, voluntarily disclosing the income and the situation to the relevant tax authorities might be a strategic move. However, this carries its own risks and should never be done without consulting a lawyer.
• Consult with Lawyer: The very basic and important step to start is talk to Lawyer / advocate. You should not hesitate in paying his consultation fee i.e. might be in range of Rs. 10,000 to 50,000 depends case to case. He is helping you in this situation of come out. He is expert in the domain and can help you explain the procedure which you might have never explored. A good lawyer can get the issues resolved much faster than you think. An experienced lawyer can advise you on the best course of action to minimize your legal exposure.

How the police behave in such cases

It is unlikely that the local police would be the primary agency to investigate such a matter unless a specific criminal complaint of fraud or cheating is filed. This type of case typically falls under the jurisdiction of specialized agencies:

• Ministry of Electronics and Information Technology (MeitY): This ministry issues the blocking orders under the IT Act and may investigate violations.
• Enforcement Directorate (ED): The ED investigates violations of FEMA. They would be interested in the flow of foreign funds and whether they are connected to any prohibited activities.
• Income Tax Department: This department will be concerned with whether the income has been accurately declared and the appropriate taxes have been paid.
• These agencies conduct thorough, document-based investigations. They will likely issue notices asking you to explain the source of funds and provide supporting evidence. Their approach is methodical and based on the financial trail.
• FAQs people normally have
  • Is it illegal to just use a VPN in India?
    No, the use of a VPN is not illegal in itself. However, using a VPN to commit a crime, access banned content, or hide illegal activities is against the law.
  • If I pay my taxes, does that make my income legal?
    No. Paying taxes is a mandatory civil obligation. It does not legalize the activity that generated the income. You can be prosecuted for the illegal activity and for tax evasion separately.
  • What is the biggest risk in this situation?
    The biggest risks are potential action by the Enforcement Directorate for FEMA violations and penalties for non-compliance with the government’s ban order under the IT Act. The financial penalties can be significant.

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• What evidence is required?
• If an investigation is launched, the authorities would typically require the following evidence:
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• Bank account statements showing the credits from the foreign source.


• Transaction history from the payment gateway (e.g., GlobalPay).


• Any contracts or agreements with the platform (“ClipVibe”).


• Records of your account and content on the platform.


• Your Income Tax Returns (if filed).


• Details of the VPN service used, although authorities may have difficulty obtaining logs directly from the VPN provider.


• How long will the investigation take?
• Investigations by agencies like the ED or MeitY can be lengthy. There is no fixed timeline. The duration depends on the complexity of the case, the amount of money involved, the number of individuals being investigated, and the level of cooperation provided. It can range from several months to a few years. During this period, your bank accounts could potentially be frozen pending the outcome of the investigation.
• Advocate Sudhir Rao, Supreme Court of India