India's largest edtech firm Byjus raided by ED over money laundering and tax evasion allegations

Highlights

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• Byjus, India's biggest edtech company, is under investigation by the Enforcement Directorate (ED) for money laundering and tax evasion charges.

• The ED has accused Byjus of evading taxes worth over Rs 1,000 crore under the Prevention of Money Laundering Act (PMLA), based on a complaint filed by the Income Tax Department.

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Byjus, India's largest edtech company, has been raided by the Enforcement Directorate (ED) on charges of money laundering and tax evasion. The ED is a central agency that investigates economic offences and foreign exchange violations. The raids were conducted at Byjus' offices in Bengaluru, Mumbai, Delhi and other locations on Friday.

According to sources, the ED has registered a case against Byjus under the Prevention of Money Laundering Act (PMLA) based on a complaint filed by the Income Tax Department. The complaint alleges that Byjus has evaded taxes worth over Rs 1,000 crore by inflating its expenses and underreporting its income. The ED is also probing the source and destination of funds received by Byjus from foreign investors.

Byjus is one of the most valued startups in India, with a valuation of over $16 billion. It has raised funds from prominent investors like Naspers, Tiger Global, Sequoia Capital, Chan Zuckerberg Initiative and others. It offers online learning courses for students from kindergarten to 12th grade, as well as test preparation for competitive exams like JEE, NEET and CAT. It claims to have over 100 million registered users and 6.5 million paid subscribers.

Byjus has not issued any official statement on the ED raid so far. However, some media reports have quoted unnamed sources from the company who have denied any wrongdoing and said that they are cooperating with the authorities. They have also claimed that the raid is a result of a "malicious campaign" by some competitors who are trying to tarnish Byjus' image and reputation.

The ED raid on Byjus is not the first instance of a crackdown on edtech companies in India. In August 2020, the Central Bureau of Investigation (CBI) had registered a case against Unacademy, another leading online education platform, for allegedly violating foreign direct investment (FDI) norms. The CBI had also raided Unacademy's offices in Bengaluru and Mumbai.

The edtech sector in India has witnessed a boom in recent years, especially during the Covid-19 pandemic, when schools and colleges were shut down and students shifted to online learning. According to a report by RedSeer Consulting, the edtech market in India is expected to grow from $2.8 billion in 2020 to $10.4 billion by 2025. However, the sector also faces challenges such as regulatory uncertainty, quality issues, data privacy concerns and high competition.