Income Tax Department searches around 20 Dentsu-linked entities

MUMBAI: Dentsu’s numbers game has taken an unexpected turn, with tax officials now looking closely at the fine print. The Income Tax Department began coordinated searches of Dentsu-linked entities on September 1, with reports putting the number of companies and entities covered at around 20 across locations including Mumbai, Delhi, Bengaluru, Chennai and Pune.

The searches, which reportedly concluded on September 5, are part of an ongoing investigation into suspected tax irregularities and financial transactions involving an Indian Dentsu subsidiary. The probe is also understood to be examining royalty and intellectual-property payments, cross-border charges and transfer-pricing arrangements, although these remain reported lines of inquiry rather than established findings.

The operation initially came to light with searches at Dentsu premises in Mumbai and Delhi. Reports said employees at some locations faced restrictions on entering or leaving the offices, while investigators examined financial records and electronic data. Personal phones and laptops were also reportedly taken into custody, with parts of some premises sealed.

Among the entities reportedly covered by search warrants were Dentsu Aegis Network India, Dentsu Network Advertising, Dentsu Advertising and Media Services India, Dentsu Communications India, Dentsu Marketing Solutions, Dentsu Media India and Dentsu One, along with entities that had subsequently been amalgamated into other Dentsu companies.

The probe gained another dimension on September 2, when reports linked it to disclosures in Dentsu’s FY2025 annual report. The company had said it investigated certain transactions involving an Indian subsidiary with assistance from external legal and professional advisers and subsequently received claims totalling approximately Rs 522.8 crore from parties claiming to have supplied goods and services to the subsidiary.

Dentsu, according to the annual-report disclosure, rejected those claims, saying it believed the underlying transactions did not involve bona fide goods or services. The company did not recognise the claimed liability and said investigations were continuing while it cooperated with authorities.

Importantly, the Rs 522.8 crore figure is not the amount of tax Dentsu is alleged to have evaded. The figure relates to claims connected with purported goods and services transactions, and the public record does not establish whether those claims are directly responsible for the current searches or what eventual tax liability, if any, could arise.

By September 4, reports had pointed to a possible ‘royalty pivot’ in the investigation, with scrutiny potentially extending to payments involving intellectual property and overseas Dentsu group companies. Such arrangements can include licensing, management and service fees, technology charges, shared services and transfer-pricing structures.

That line of inquiry could make the investigation wider than a single disputed transaction, potentially examining how income and expenses are allocated between Dentsu’s Indian operations and its international group. However, no finding of wrongdoing on these issues has been publicly established.

The searches also reportedly had an operational impact on employees, with Dentsu’s APAC leadership said to have asked staff in some locations to work from home while investigators examined financial and server data. Reports later said that the residences of two Dentsu India leadership members were also searched.

The latest action is not Dentsu India’s first brush with regulators. Its India operations were reportedly subjected to an Income Tax search in 2022 in connection with an investigation involving one of its clients. In December 2024, the Enforcement Directorate searched premises linked to Dentsu India over an alleged Rs 137 crore CSR-related matter, while in March 2025, Dentsu was among advertising and media agencies affected by a Competition Commission of India investigation into the sector.

For now, the September operation has ended, but the tax investigation has not. Authorities could still examine seized electronic data, reconcile accounts, question individuals and, depending on what emerges, pursue assessment proceedings, tax demands, penalties or further enforcement action.

As of September 7, 2026, however, one distinction remains crucial: a search is an investigative step, not a finding of guilt, and no definitive public finding of tax evasion has yet been announced.