FEMA violation: ED’s case against the BBC after documentary row

Enforcement Directorate has lodged a case against the BBC. The ED's case against the BBC came after the controversial documentary row.

ED’s case against the BBC

India’s anti-money laundering agency Enforcement Directorate (ED) has filed a Foreign Exchange Management Act (FEMA) violation case against British Broadcasting Corporation’s (BBC) India chapter, news agency Reuters reported. The ED reportedly lodged the FEMA violation complaint against the BBC a fortnight ago and has questioned half a dozen of the latter’s employees. ED’s case against the BBC is based on allegations of foreign direct investment (FDI) norm violations.

The ED has alleged that the BBC has violated the FDI norms. The ED’s case against the BBC under FEMA followed a lead provided by India’s Income Tax Department (IT Department), which ‘surveyed’ the BBC’s offices in New Delhi and Mumbai in February. The IT Department claimed that the survey was conducted under Section 133A of the Income Tax Act.

Before the ED’s case against the BBC was lodged, the IT Department alleged that the western media outlet has been non-compliant with the prevalent transfer pricing rules, and it has persistently and deliberately violated such norms. The IT Department alleged that the BBC has deliberately diverted a significant amount of its profits earned from India and didn’t follow the arm’s length arrangement in the case of profit allocation.

However, before the ED’s case against the BBC, the IT Department’s survey at the outlet’s office had sparked a row. Critics of India’s federally ruling far-right Bharatiya Janata Party (BJP) government alleged that the federal agencies have been unleashed against the media house following its release of a two-part documentary that criticised Prime Minister Narendra Modi’s role in the 2002 Gujarat anti-Muslim pogrom and accused his government of indulging in promoting Islamophobia.

The BJP-led Union government had ordered social media platforms YouTube and Twitter to take down the links to the documentary, which was released on January 17th, as it was found “undermining the sovereignty and integrity of India” and was accused of having “the potential to adversely impact” India’s friendly relations with foreign countries.

Moreover, before the IT Department went after the BBC, an Income Tax Appellate Tribunal in Delhi had ruled out in December 2022 that the distribution revenue received by the company from the distribution of the BBC World News Channel in India is “not in the nature of royalty”. The appellate also said that such revenue, which had already been offered to tax by the BBC’s India outlet can be attributed to the assessee notionally and taxed in India.

The ED’s case against the BBC is the latest addition to the diplomatic row between India and the UK. Earlier, India objected fiercely to the BBC’s documentary against Modi and delayed discussions on a trade agreement between the two countries. The relations also suffered a setback following a massive protest by pro-Khalistan activists in the UK, during which India’s High Commission was allegedly vandalised. Neither the UK government nor the ED has officially commented on the case at the time of filing this report.

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