The Enforcement Directorate (ED) has filed proceedings against BBC India for alleged foreign exchange violations under the Foreign Exchange Management Act (FEMA). Officials said the case was registered two weeks ago, and so far, they have questioned six employees, including a BBC India director.

The officials said the ED also requested documents and transcripts of statements from some company executives under FEMA regulations. The investigation examines the company’s alleged foreign direct investment (FDI) violations. “Today, they have called another BBC employee and provided some documents, inquiries are still ongoing,” an official said.

In early February, the income tax department launched an investigation at the BBC’s offices in New Delhi and Mumbai over what it called “non-compliance” with transfer pricing rules and substantial shifting of profits. Under Section 133A of the I-T Act, an investigation is usually a prelude to a search and seizure and is conducted only on-premises. I-T officers looked at ledgers, bank accounts, cash, stocks, and priceless documents during the investigation.

The surveys on the BBC focus on “price manipulation for unauthorised benefits, including tax benefits”. I-T department alleges BBC non-compliance under transfer pricing rules; Persistent and wilful breach of transfer pricing norms. The department claimed that it deliberately diverted a significant amount of profits and did not follow the arm’s length arrangement in allocating profits.

The tax department’s action comes weeks after the BBC released a documentary on the 2002 Gujarat riots titled “India: The Modi Question” on January 17. On January 20, the central government ordered YouTube and Twitter to remove links to the documentary, which officials said was found to be “undermining India’s sovereignty and integrity”. It had “the potential to adversely affect the country’s friendly relations” with foreign countries” and “public order within the country”.

Earlier, the tax department had marked distribution revenue earned by BBC World Distribution Ltd as royalty to tax, along with determining whether it has a permanent establishment (PE) in India. In December 2022, the Delhi Income Tax Appellate Tribunal bench ruled that the company’s distribution revenue from BBC World News Channel in India is “not like royalty”. It further held that such income, which was already offered to tax by the Indian entity, BBC World India Pvt Ltd and that “no part of such income can again conceptually be attributed to the assesses and cannot be taxed in India” and, therefore, 2007-08 and 2008-09 for the assessment years 2008-09 have been asked to be deleted by the tax authorities.