EXCLUSIVE | Income Tax Department finds tax evasion by BBC India: Sources

The Income Tax Department found major tax discrepancies during a survey of UK-based broadcaster BBC's offices in New Delhi and Mumbai. Sources told Zee Business citing BBC documents that the company had not filed income tax for two consecutive years even after having a mutual agreement procedure (MAP) in place. An MAP is a bilateral mechanism between the tax authorities of two countries aimed at mitigating the problem of double taxation. 

The Income Tax Department uncovered various transfer pricing violations in the company in its dealings with BBC United Kingdom, the parent company of BBC India. 

“The Income Tax Department has made a strong case against BBC India on various tax provisions. After three days of investigation, the department found BBC India evaded approximately Rs 55-60 crore of tax by not filing tax returns in India," a source close to the development told Zee Business. 

“BBC India has filed a Mutual Agreement Procedure with the department for specific tax returns. However, even after this procedure, the company has not done tax filing, which is a clear cut case of tax evasion. In this case, the department can easily file prosecution against BBC India," another source told Zee Business. 

Income Tax Department authorities completed a survey on the New Delhi and Mumbai offices of BBC India late night on February 16. BBC India confirmed the development. 

"We will continue to cooperate with the authorities and hope matters are resolved as soon as possible... We are supporting staff, some of whom have faced lengthy questioning or been required to stay overnight, and their welfare is our priority. Our output is back to normal and we remain committed to serving our audiences in India and beyond," a BBC Spokesperson said after the tax authorities left the company's New Delhi and Mumbai offices. 

“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,” the spokesperson said, adding that BBC will respond appropriately to any direct formal communication received from the Income Tax Department.

"BBC India is a subsidiary of BBC UK. However, BBC India makes production and sends it to the UK for commercial decisions. In return, BBC UK gives approximately nine percent to India in which they have to give salaries and other operating expenses including rents and production cost. The department feels this could be the case of transfer pricing and needs to investigate further on this angle. However, prime-facie, it is a violation of transfer pricing rules," one source told Zee Business.  

“The department had sent several notices to BBC India to present their case in front of the department but most of the time they did not turn up," said another source.  

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