ED registers FEMA case against BBC India over foreign exchange violation

Two months after the Income Tax (I-T) Department conducted "survey operations" in a tax evasion case, the Enforcement Directorate (ED) has registered a case against news broadcaster BBC India for foreign exchange violations.

Officials said on Thursday that the agency has asked BBC India to submit documents and called some executives for the recording of their statements under provisions of the Foreign Exchange Management Act (FEMA). The ED would look into violation of FDI rules by the company, officials added.

A deputy managing editor of BBC India has deposed before the agency.

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The action by the ED comes after the Central Board of Direct Taxes (CBDT) said that the income and profits shown by various BBC group entities were "not commensurate" with the scale of their operations in India and tax has not been paid on certain remittances by its foreign entities which have not been disclosed as income in India.

The I-T Department had claimed that it conducted survey operations related to international taxation and transfer pricing of BBC subsidiary companies. They claimed BBC was served notices in the past but was "defiant and non-complaint" and had "significantly diverted its profits".

After the survey operations, the CBDT had said that the services of seconded employees have been utilised for which reimbursement has been made by the Indian entity to the foreign entity concerned. Such remittance was also liable to be subject to withholding tax which has not been done.

It also said there were "several discrepancies and inconsistencies" with regard to Transfer Pricing documentation.