New Delhi: A month after an income tax (I-T) survey on the British Broadcasting Corporation (BBC) offices in India, the Enforcement Directorate (ED) has begun a FEMA (Foreign Exchange Management Act) probe against the broadcaster and summoned its administration and editorial staff for questioning, ThePrint has learnt.
According to a source in the agency, the inquiry began a month ago, soon after the I-T survey in February, and at least six employees have so far been called in for questioning. The employees were also asked to submit relevant documents related to the corporation’s finances and funds, the source said.
At the time of the I-T surveys, the BBC had said it would continue to cooperate with the authorities and hoped matters would be resolved as soon as possible.
“The BBC is a trusted, independent media organisation and we stand by our colleagues and journalists who will continue to report without fear or favour,” a BBC spokesperson said in February.
The I-T department had carried out the survey to probe alleged irregularities in “transfer pricing” and “international taxation”. According to the source, it is suspected that the BBC did not comply with the Transfer Pricing Rules and got unauthorised tax advantages. It is also suspected that they diverted profits.
The ED is now probing the flow of foreign currency and how funds were diverted, the source said
Transfer pricing is an accounting practice that shows — as part of a larger exercise — the price that one unit or division in a company charges another division for goods and services provided, including salaries of their employees.
Transfer pricing can lead to tax savings for a corporation, which may be contested by tax authorities as evasion. In this case, the I-T department is probing the BBC (the larger enterprise) for alleged irregularities in transfer pricing among its divisions, subsidiaries.
Without naming the BBC, the Central Board of Direct Taxes (CBDT) also released a statement, days after the survey, saying that their “survey revealed that despite substantial consumption of content in various Indian languages (apart from English), the income/profits shown by various group entities is not commensurate with the scale of operations in India”.
It further said that they have evidence of unpaid taxes and undisclosed income in the records.
“…During the course of the survey, the department gathered several evidences (sic) pertaining to the operation of the organisation 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,” it said.
(Edited by Sunanda Ranjan)
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