The British Broadcasting Corporation (BBC) has reportedly admitted that they evaded taxes in India and are now committing to pay Rs 40 crores in tax arrears. According to a report in Times of India, BBC is yet to file revised returns or provide their commitment to the Tax Authorities in writing. The report said that tax sources have said that BBC has only made a statement of intent so far and no payment has been received by the IT department.
According to a report by India.com, the BBC has agreed to cough up Rs 40 crores to make up for their tax evasion over a period of almost 6 years – from 2016 to 2022.
In February 2023, the BBC offices were surveyed by tax authorities for 3 days. After the survey, the Finance Ministry had issued a statement explaining the depth of tax fraud committed by the BBC.
Without naming BBC, the statement said that a survey action under section 133A of the Income tax Act, 1961(the Act) was carried out at the business premises of group entities of a prominent international Media Company at Delhi and Mumbai.
The statement noted that BBC is engaged in the business of development of content in English, Hindi and various other Indian languages; advertisement sales and market support services, etc in India.
The statement said that the income/profits shown by various group entities under BBC India do not match their scale of operations in India, as the quantity of content in India is substantial. In the raid by the Income tax department, which has been described as a survey, several pieces of evidence were found that show 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.
The ministry further informed that the survey revealed that BBC India had made remittances to its foreign offices for utilising the services of seconded employees, or temporary employees sent from overseas. While such remittances are subjected to withholding tax, BBC avoided it.
Further, the I-T department also found 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, the statement said.
The ministry has said that the survey operation has resulted in the unearthing of crucial evidence by way of statements of employees, digital evidence and documents which will be further examined in due course. “It is pertinent to state that statements of only those employees were recorded whose role was crucial including those connected to, primarily, finance, content development and other production-related functions,” the ministry said.
Interestingly, while the ‘Liberal’ ecosystem in India had tried to defend the BBC and blame the Modi government for conducting the survey at the BBC premises, the broadcasting company has a notable past of tax evasion and fraud. For example, Thousands of public employees, including those at the BBC, were not paying their taxes at the source, according to a 2012 report from the public accounts committee in the United Kingdom (UK). The full report on BBC’s history of tax evasion can be read here.