India's Enforcement Directorate registers case against BBC India for foreign exchange violations

India's law enforcement agency, Enforcement Directorate, has registered a case against the British Broadcasting Corporation (BBC) India news broadcaster for alleged foreign exchange violations, as per reports citing sources.The case was filed under the Foreign Exchange Management Act (FEMA) two weeks ago. Authorities have been probing BBC India employees with so far six employees being interrogated. It even involves high-level employees of the organization including one of the BBC India directors.

Media outlets while quoting an officer reported, “Today, they have called another employee of BBC along with some documents and questioning is still going on."

This comes after India's Income Tax Department carried out tax surveys at BBC offices in Delhi and Mumbai in February. The IT department had reportedly "gathered several evidence" which indicate that "tax has not been paid on certain remittances" which have not been disclosed as income in India by the foreign entities of the group.

These developments also figured during a discussion between External Affairs Minister S Jaishankar and UK Foreign Secretary James Cleverly in early march when Cleverly visited India to attend G20 Foreign Ministers' meeting.

Central Board of Direct Taxes (CBDT) in a statement said that the income and profits disclosed by BBC group entities in India are "not commensurate" keeping in mind the scale of their operations.

The CBDT further added, "The survey operations also revealed that services of seconded employees have been utilised for which reimbursement has been made by the Indian entity to the foreign entity concerned."

The survey reportedly found several "discrepancies and inconsistencies" with regard to transfer pricing documentation. Such discrepancies relate to the level of relevant Function, Asset and Risk (FAR) analysis, incorrect use of comparables which are applicable to determine the correct Arms Length Price (ALP) and inadequate revenue apportionment, among others.

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The BBC raids were followed weeks after the UK broadcaster on 17 January released a documentary on the 2002 Gujarat riots titled ‘India: The Modi Question’.Indian government opposed the documentary and ordered curbs on its release on various social media platforms.

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