Under the Foreign Exchange Management Act (FEMA), the Enforcement Directorate (ED) has filed a complaint against the British Broadcasting Corporation (BBC) India for alleged foreign exchange violations. Officials stated that since the investigation was filed two weeks ago, six employees, including one of BBC India’s directors, had been interrogated.
According to sources, ED has also requested papers and the recording of statements from several corporate officials in accordance with FEMA regulations. The investigation focuses primarily on alleged violations of foreign direct investment (FDI) by the corporation. An official reported that “today they called another BBC employee along with some documents and questioning is still ongoing.”
The Income-Tax Department conducted checks at the BBC’s offices in New Delhi and Mumbai earlier in February regarding what it claimed to be “non-compliance” with transfer pricing regulations and a significant diversion of profits. A search and seizure operation is typically preceded by a survey carried out under Section 133A of the I-T Act, which only occurs at commercial locations. During a survey, I.T. officials examine the books of accounts, bank accounts, cash, stock, and non-valuable papers.
Investigating “manipulation of prices for unauthorised benefits, including tax advantages” is the main goal of the surveys on BBC. The I-T department claimed that BBC had repeatedly and knowingly violated transfer pricing laws, making it non-compliant with the regulations. The department asserted that it intentionally misappropriated a sizeable portion of the income and did not allocate the proceeds according to an arm’s length agreement.
Following the British broadcaster’s January 17 release of the documentary “India: The Modi Question” on the 2002 Gujarat riots, the tax department took action a few weeks later. The documentary was found to be “undermining the sovereignty and integrity of India” and to have “the potential to adversely impact” both the nation’s “friendly relations with foreign states” and “public order within the country,” according to central government officials, who on January 20 ordered YouTube and Twitter to remove links to it.
As well as establishing whether BBC World Distribution Ltd. has a Permanent Establishment (PE) in India, the tax department previously flagged distribution revenue collected by BBC World Distribution Ltd. as subject to tax as royalty. The Income Tax Appellate Tribunal’s Delhi bench found in December 2022 that the distribution revenue the corporation received through the distribution of the BBC World News Channel in India is “not in the nature of royalty.” Additionally, it had stated that such money had already been made taxable by BBC World India Pvt. Ltd. in India and that “no part of such income can again be attributed to the assessee notionally and taxed in India”; as a result, it had requested that the tax authorities remove such addition.