Income tax officials have been parked at the British media company’s India offices for the past two days—conducting a ‘survey’ of its documents. There has been no official statement, and yet media outlets are parroting identical allegations from unnamed sources. We tried to piece together exactly what’s going on and why—but be warned, much of the information is still murky and incomplete.
Editor’s note: We apologise for the delay in publishing today. This Big Story proved more time-consuming than expected.
Researched by: Rachel John & Nirmal Bhansali
First, a quick guide to BBC India
The origin story: The British Broadcasting Corporation first entered India as a loyal servant of colonialism in 1932—with its English-language Empire Service on shortwave radio. In 1940, it added a Hindi language service—soon followed by Bengali, Gujarati, Marathi and Tamil.
The Louis Malle documentary: Over the post-Independence decades, the BBC acquired a reputation for accurate reporting. But its coverage often enraged the ruling government—and it exited the country twice in the 70s. The first big brouhaha was also triggered by a documentary—Louis Malle’s seven-part series titled ‘Phantom India’.
While the lens was mostly positive, “a few shots of people sleeping on the pavements of Calcutta” in the first episode sparked great outrage. PM Indira Gandhi demanded the rest of the series be cancelled as it was "repugnant to good taste.” The BBC refused, its India correspondent lost his accreditation—and the government imposed such onerous restrictions on the India office that BBC finally shut it down.
The Emergency era: The BBC returned to India in 1972—and was mostly a one-man show led by its now legendary India bureau chief Mark Tully. But the BBC was kicked out in 1975 after the imposition of Emergency—when Tully refused to sign a censorship agreement. Tully later claimed that one of Indira Gandhi’s advisors had ordered the Information & Broadcasting minister Inder Gujral: “I want you to arrest him, take his trousers down, and give him a beating and then put him in jail.”
Irony alert: BBC’s world radio services remained hugely popular during the Emergency among Indians as one of the few sources of reliable information. And it was often the first to break big stories during the Doordarshan/All India Radio era. For example: The assassination of Indira Gandhi in 1984. And its coverage of the lead-up to the Golden Temple siege—from the inside—that same year is memorable to this day.
Recent run-ins with foreign press: have been far less serious. In 2002, the government was annoyed at TIME—for reporting that then PM Vajpayee “fell asleep in cabinet meetings, was prone to ‘interminable silences’ and enjoyed a nightly whisky.” The Delhi bureau chief faced an investigation for “passport irregularities” but not much else. In 2017, the government banned the BBC from national parks after a “grossly erroneous” documentary highlighting a ruthless anti-poaching campaign at the Kaziranga sanctuary.
BBC’s financial structure: The BBC operates under the aegis of the Secretary of Culture, Media and Sport—and is overseen by a board of directors that makes all the big decisions. It is primarily funded by licence fees paid by British citizens—but that may change in 2027 when its charter is up for renewal. But its business operations appear to be booming—and it posted a record income of $6.4 billion last year.
As for BBC India: There is very little reporting on the corporate structure of BBC’s operations in India—which is puzzling since the latest controversy is all about taxes. Fortune lists three subsidiaries: BBC World Service India Private Limited, BBC Studios India Pvt. Ltd and BBC Global News India Pvt Ltd.
World Services produces radio, TV and digital content—while BBC Studios is a TV production company. Global News appears to manage TV channels in India—but its role is the least clear since ET lists it as a real estate company 🙄.
Ok, tell me about the raids…
It all kicked off at 11:30 am on Tuesday when income tax and police officers entered the BBC India offices in Delhi and Mumbai. According to NewsLaundry, around 24 (or maybe 50) officers swarmed the Delhi office. The unannounced visit started on a rocky and confrontational note:
Targeting journalists: According to unnamed BBC employees, the officers targeted both the accounts and editorial desks—which is odd for a tax-related operation:
The employee in his late 30s remembers one of his colleagues telling an official that the floor of the office they were on dealt only with editorial and that the accounts team was on another floor. He said the official replied, “We will decide what exactly we want to search for and determine if there is any material that we can use. For that, we would need to search all computers.”
They also demanded individual invoices filed by reporters for expenses—and looked for keywords like “Benaami, Hawala, International Taxation, black money and other things like that.”
Targeting phones: The officers immediately took away the employees’ phones, switched them off and kept them on a desk. There are multiple accounts of the IT officers cloning information on phones and computer peripherals in the accounts department.
The neverending operation: As of midnight on Wednesday, IT officials were still on the premises in both Delhi and Mumbai—more than 36 hours after they first entered the building. According to one employee:
The whole exercise is nothing but an act of intimidation. After sealing the office, the IT officials stayed overnight on the premises and the survey is still continuing for the second day. Some of the staff members, mainly from the finance department, were asked to stay back last night.
And why is the BBC being raided?
No, this is not a raid. The government insists this is only a ‘survey’—which allows IT officers to enter any place of business and inspect its financial records. But it is not as aggressive as a ‘search and seizure’—what a layperson calls a ‘raid’. There are a number of restrictions:
- Typically, they are only authorised to take and inventory, make copies etc. They can impound documents and documents—but must record a reason for doing so—and can only hold on to it for 15 days.
- Surveys are only conducted on business premises—while search and seizures allow officers to enter and search any location if he suspects that documents, illicit assets are being stored there.
- Surveys can only be carried out during business hours—while search and seizures can be conducted at any time—and continue until the operation is completed.
- Most importantly, the officers cannot indiscriminately seize phones or computers: “Only books of accounts and documents can be impounded subject to a reasoned order.” They can make copies of the information, but again, only if they record a legitimate reason for doing so.
The main takeaway: Whatever the government may want to call it, the actions of the officers do not reflect what happens during a typical survey.
But what’s the reason for this ‘survey’?
There hasn’t been a single official statement released by any government agency. What we have instead are quotes from unnamed sources—using the exact same language across media outlets. NewsLaundry suggests that some kind of note was circulated among journalists. And it uses a lot of jargon to damn the BBC:
It alleged the BBC has been “non-compliant under transfer pricing rules”, “persistent and deliberately violative of transfer pricing norms”, and “deliberately diverted” a “significant amount of the profits” without following “the arm’s length arrangement in the case of allocation of profit”. It said the surveys have been conducted with a view to investigate BBC’s “violation of the transfer pricing rules and its diversion of profits”.
The ‘note’ makes sweeping allegations—describing the BBC as “continuously defiant and non-compliant” and “a repeat offender”—claiming it has “significantly diverted their profits,” and manipulated prices to evade taxes. But it offers next to no evidence. We don’t even know which assessment year or BBC entities are involved.
Umm, translation please!
Since we don’t have specifics, the best we can do is translate two key terms: ‘transfer pricing’ and ‘arm’s length’.
Transfer pricing: Very often, subsidiaries or companies controlled by the same entity do business with each other. The amount they charge each other for these goods or services is labelled as ‘transfer pricing’. The big worry for governments is that multinational companies can often manipulate these prices to duck taxes. Here’s a simple example.
- Imagine there are two companies, A and B—both subsidiaries of the same parent company. Company A makes software for cars—the other makes cars.
- Now Company A must charge Company B the same amount as it charges other carmakers.
- But the tax burden on profits is higher in the country where Company A operates—and lower in the jurisdiction of Company B.
- So Company A charges a lower price for its software—thereby reducing its revenues–resulting in lower taxes. It can even show losses if it is aggressive enough in its pricing.
- And Company B makes a bigger profit but pays less tax since the rates are lower in its country. It’s a win-win from the parent company’s point of view.
A good example: Coca Cola—which transferred its intellectual property rights to subsidiaries in offshore units in Europe, Africa and South America. It is now facing a $3.3 billion tax bill from the US tax authorities.
At ‘arm’s length’: The exact definition, according to the Indian tax law, is this: “‘arm's length price’ means a price which is applied or proposed to be applied in a transaction between persons other than associated enterprises, in uncontrolled conditions.”
In other words, the transaction between Company A and Company B is not subject to the usual market forces since the two can potentially determine the terms. The law, therefore, requires them to set the price as though it were with any other party—i.e in “uncontrolled conditions.” Or more broadly:
Regulations enforce an arm’s length transaction rule that states that companies must establish pricing based on similar transactions done between unrelated parties. It is closely monitored within a company’s financial reporting.
The IT department has a complicated formula for calculating the arm’s length price—which we are not going to bother to explain since we don’t really get it. But feel free to check it out here.
Ok, so they haven’t offered any proof of this?
Nope. But more importantly, even if there is an issue with the transfer pricing, there are a bunch of things that just don’t add up.
One: As tax lawyers point out, transfer pricing disputes almost never trigger surveys. The law requires companies to submit a Transfer Pricing Report—along with supporting documents and its method of computing ‘arms’ length price’. So the tax officials don’t need to conduct a survey or a search and seizure to access these documents. Even if there is evidence for these allegations, the normal process looks like this:
[T]he most appropriate course of action available with the department is to launch a fresh assessment of income or to complete the pending assessments with these findings. This will necessitate issuance of show cause notices, conducting personal hearings with the assessing officer/transfer pricing officer and then passing a reasoned order making a demand of outstanding taxes. This process is similar to the ordinary assessment of income of any taxpayer.
Two: It isn’t clear how that unnamed note is stating sweeping allegations as fact. Even if we accept a survey is necessary, its purpose is to “inspect and verify the claims stated before the tax authorities.” So it’s bizarre that the government already knows the conclusions of the survey before it has been conducted—and its findings assessed.
Three: Of course, as many outlets have pointed out, the timing of the survey is also inexplicable. Government sources claim that BBC has been wilfully and repeatedly violating the rules for years. So why did the IT department suddenly leap into action now—just weeks after the BBC aired a damning documentary on the Gujarat violence? Surely, if the intent is only to ensure tax compliance, the government could have waited just a bit longer.
Point to note: If the intent was to punish the BBC for resurrecting allegations against Narendra Modi’s role, then it has entirely backfired. Almost every international outlet has led with clips from the documentary—using it to frame their report on the BBC raid. Also this: Allowing the BJP spokesperson to rant about the “Bhrasht Bakwaas Corporation” with a “tainted and black history of working with malice against India”—while the surveys were underway—hardly helps the cause of impartiality.
Four: If there are doubts about the government’s real intentions, they are well-earned. In recent years, it has wielded the IT club Indian media outlets on an almost routine basis:
- In September 2022, the tax warriors conducted surveys of the independent think tank Centre for Public Research, Oxfam India and the IPS Media foundation—which funds independent digital media like The Wire.
- In 2021, Newslaundry and Newsclick were the target of similar surveys. Dainik Bhaskar offices were raided soon after the newspaper carried front page stories highlighting dead bodies floating in the Ganga—at the height of the second wave.
- In 2018, there were income tax raids on the offices of The Quint—and the residence of its founder Raghav Bahl. The News Minute–which is partly owned by The Quint’s parent company—also received a visit from the taxman.
- And this doesn’t include the raids on NGOs that have been on the receiving end—or pesky opposition netas.
The bottomline: You can bully someone into submission—but you can never bully them into respecting you. In the case of the BBC, the government is unlikely to get either compliance or respect.
Reading list
NewsLaundry and The Caravan have the most details on the BBC ‘survey’. Scroll has a good overview of the history of BBC’s run-ins with the Indian government. Advocate Deepak Joshi in The Wire explains the misuse of surveys in this case. If you need a refresher, The Guardian has a handy explainer on the controversial BBC documentary. The Quint and Investopedia are best to understand the concept of transfer pricing. TIME magazine looks at the various searches and surveys conducted under the Modi government in recent years.
