Black-money returning as export receipts

Source : S.Muralidharan:BL:24th Oct 2011

When black money can enter India through over-invoiced exports 

and participatory notes, VDIS will have few takers.

There was a time when exports were given a lot of tax sops — such as duty drawback, cash assistance and income-tax exemption, either full or partial — which tempted unethical businessmen to inflate their exports through over-invoicing or other means. Over-invoicing of imports is done to get a kickback from the obliging suppliers, especially those for whom access to Swiss and other convenient bank accounts is easy and laughably simple. Over-invoicing of sales and its variant, exports, on the other hand, is done to make legitimate the illegal money one has accumulated over the years.

INFLATED OR FAKE EXPORTS

At the height of fiscal indulgence to exports, there was a bizarre story doing the rounds. A crack team of sleuths headed to Dubai on a tip-off and their efforts were amply rewarded when the export consignment to that place from India, worth several crores, turned out to be a heap of rags neatly packed with layers of insulation and other material designed to give it the much-needed verisimilitude, and more importantly to ward off any attempt at opening the boxes!

This was the tip of the iceberg regarding the widespread practice of inflated or fictitious exports with an eye on the hefty tax benefits. Relentless pressure from World Trade Organisation saw the Indian government gradually withdrawing these benefits — sometimes in a phased manner. But the steady weakening of the Indian rupee over the last couple of months coupled with the government's threat to go after those who have salted away their ill-gotten wealth abroad has once again revived the practice of inflated or fake exports. Exports to Bahamas, of all places, has jumped 1000-fold from $2.2 million in 2008-09 to $2.2 billion in 2010-11, bearing out the sneaking suspicion that there is something amiss in the sudden soaring of exports all round.

Export of services lends itself to an easier manipulation of invoices, given the fact that, unlike goods, services are always unknown quantities. Who knows, several Indians may be waiting in the wings ready to proffer advice and consultancy for an exaggerated fee, all designed to bring back, duly laundered, the ill-gotten money stashed away abroad. The Indian government has recently entered into information-sharing agreements on tax matters with several recalcitrant nations allegedly giving sanctuary to crooks and criminals. Bahamas, incidentally, is one of them. India can, therefore, crack the whip and ask to verify whether all these so-called exports were real or fictitious, normal or overstated.

But if it chooses to wink at them, it would appear that it doesn't mind the shenanigans of actual or charlatan exporters in the smug knowledge that, after all, the country is getting precious foreign exchange.

In any case, the revival of the over-invoicing route to money laundering should have dampened sufficiently the enthusiasm of the government in going ahead with Voluntary Disclosure of Income Scheme (VDIS) II that seeks to exclusively address the problem of Indian money stashed away abroad.

Indeed, given this fertile and hassle-free route, no one would seriously consider pressing ahead with VDIS II. Further, a lot of water has flowed down the bridge ever since VDIS 1997 was implemented.

PARTICIPATORY NOTES

The Foreign Institutional Investors' (FII) scheme with its inscrutable Participatory Note (PN) feature enables round-tripping which, shorn of jargon, means Indian black money stashed away abroad coming back in the form of stock market investments, riding piggyback on foreign investors.

Mauritius, too, is a favourite money laundering destination for Indians with black money abroad in view of the tax exemption it confers to a Mauritius resident from tax on capital gains earned in India. With such relatively hassle-free avenues, perhaps not many would take the trouble of availing of the tax amnesty scheme, or its variant, VDIS II, supposedly on the anvil.

Investigation authorities in India have always been stymied in their work when their audit or investigation trail takes them beyond India. But the Indian government should, like the US government, read the riot act to the foreign governments indulging crooks and criminals. Better still, there must be pre-emptory strikes like abrogation of the patently invidious tax treaty with Mauritius and the scrapping of the attractive PN feature of the FII scheme.

The wily captains of industry in India have got for themselves a permanent amnesty scheme by getting written into the Indian income-tax law through the Finance Act, 2011, a hugely concessional tax of 15 per cent on dividend received from foreign companies. The government cannot be seen running with the hare and hunting with the hounds.

(The author is a Delhi-based chartered accountant.)

Clauses for Rental /Lease agreements

Source :BL;24th Oct 2011

Clauses to watch out for while preparing a rental agreement. This applies not only to commercial lease agreements but also to residential rental agreements you enter into on behalf of your company.

Repairs

A distinction should be made between major and minor repairs. The normal practice is for the landlord to be responsible for any and all major repairs to be conducted on the property (for example, any leaking / water seepage, major electrical problems, etc), and for the tenant to be responsible for all the minor ones (for example, replacing bulbs, motors, fixing minor leaks in plumbing, etc). The agreement should clearly state the same.

Wear and Tear

Certain features of the property are bound to deteriorate with time (like the paint coating, etc) and the tenant cannot be held responsible for the same.

The covenants should include a clause stating that the tenant will return the property in the condition he or she received it, subject to normal and acceptable wear and tear. This will save the tenant from having to paint the house or replace rusted fitting as long as the same was not caused by any direct act or negligence.

Maintenance / Association Charges

In the case of an apartment, there may be fixed monthly maintenance charges or apartment association charges. The normal practice is for the landlord to pay these charges. The agreement should contain a clause stating the same.

Rent

The agreement must contain the exact monthly rent payable by the tenant to the landlord, along with the method of payment (cheque, demand draft, etc) and details as to when the payment must be made (for example, rent must be paid on the 1st of every month, no later than the 5th of every month, in advance).

List of Furniture / Fixtures

If the property comes with any fixtures (lighting fixtures, paintings, chandeliers), furniture (carpets, beds, tables, chairs) or appliances (geysers, refrigerators, air conditioners), the same must be listed, counted and added as an annexure to the agreement and will form a part of the property.

The tenant must ensure that they are undamaged and in working condition before taking possession of the property, as he or she will be liable for them.

The wear and tear clause must apply to these items as well.

Duration of the Agreement

Strictly speaking, the agreement has to be registered, but as per common practice, it is not. The duration of the rental agreement varies, but is normally for 11 months with a clause for renewal of the lease on the mutual agreement of the parties. Some terms might change on renewal and the same should be mentioned in the agreement (for example, increase or rent, normally by a fixed percentage every year; increase in deposit, etc), or a clause stating that the terms may be modified pursuant to the renewal should be included in the agreement (allows the parties to decide on the terms at a later stage).

Notice of Termination

The agreement must contain a clause stating that the agreement can be terminated by either parties, and must state the manner of serving the notice and the duration (that is, informing the other party in advance if the possession of the property is to be altered. For example, notice must be served in writing, not less than one month in advance). Normally, two-month notice is sufficient.

Lock in Clause

Some agreements have a lock-in clause. This means that even though there is a fixed period of notice stated in the agreement, the tenant cannot leave until the lock-in period is over. (For example, if the lock-in period is five months, even if the tenant gives the landlord two-month notice in writing as per the agreement, he will still have to pay rent for the first five months, no matter when he gave notice). The tenant should be wary of this clause, especially if he is unsure of how long he intends to occupy the property. If the landlord is insistent on this clause, the tenant can try and add a provision for exceptional circumstances and the procedure to determine rights / liabilities in that regard (for example, lock-in clause will not apply if the tenant is transferred to another city, etc).

Contributed by vakilsearch (www.vakilsearch.com), 
an online legal guidance and legal solutions provider. 
You can ask your question on www.vakilsearch.com or
 contact +91 978 989 6023.

RBI moots awareness campaign on banking ombudsman scheme

Creating financial awareness: (from right) Mr M. Palaniswamy, Banking Ombudsman,

 RBI; Mr U.V. Kulkarni, DGM, RBIBangalore, and Mr J.S. Ravishankar, AGM,

 at a press conference in the city on Monday.

Source: BL:BANGALURU :OCT 24,2011
 Photo: G.R.N. Somashekar

A professor at the Indian Institute of Management, Bangalore, lost Rs 18 lakh to an SMS 

fraud which lured him with $5 billion from a multinational company.

The Reserve Bank of India's Banking Ombudsman for Karnataka, Mr M. Palaniswamy, said that such cases were on the rise, and awareness of such fraud and phishing activities on the Internet space have to be spread.

He added that the RBI has now mandated people like him and his team to visit taluks and villages every month to spread awareness on the banking ombudsman scheme. “Not many people, even in the urban areas, are aware of this scheme,” he pointed out.

According to him, 3,694 complaints were received by his team in 2010-11 (the RBI follows a July to June calendar). Of these, the highest number of complaints was on failure on commitments made by banks to customers at 1,232, while complaints on ATM, debit and credit cards were at 768, followed by deposit-related complaints at 268 and 176 pension-related complaints.

On the other hand, State Bank of India and its associate banks were the banks which were complained against most at 1,521, “mainly because they have largest volume in terms of branch network”, Mr Palaniswamy pointed out.

However, 2009-10 saw more complaints at 4,343 complaints, and 2008-09 saw 3,524 complaints.

Last days of Steve Jobs

Sources ;Charles Duhigg, NYT News Service | Oct 8, 2011, 12.06AM IST

Over the last few months, a steady stream of visitors to Palo Alto, California, called an old friend's home number and asked if he was well enough to entertain visitors, perhaps for the last time.

In February, Steven Jobs had learned that, after years of fighting cancer, his time was becoming shorter. He quietly told a few acquaintances, and they, in turn, whispered to others. And so a pilgrimage began.

The calls trickled in at first. Just a few, then dozens, and in recent weeks, a nearly endless stream of people who wanted a few moments to say goodbye, according to people close to Jobs. Most were intercepted by his wife, Laurene. She would apologetically explain he was too tired to receive many visitors. In his final weeks, he became so weak that it was hard for him to walk up the stairs of his own home anymore, she confided to one caller.

Some asked if they might try again tomorrow. Sorry, she replied. The man who valued his privacy almost as much as his ability to leave his mark on the world had decided whom he most needed to see before he left.

Jobs spent his final weeks - as he had spent most of his life - in tight control of his choices. He invited a close friend, the physician Dean Ornish, to join him for sushi at one of his favorite restaurants in Palo Alto. He said goodbye to longtime colleagues, including the venture capitalistJohn Doerr, the Apple board member Bill Campbell and the Disney chief executive Robert A Iger. He offered Apple's executives advice on unveiling the iPhone 4S, which occurred on Tuesday. He spoke to his biographer, Walter Isaacson. He started a new drug regime, and told some friends that there was reason for hope.

On the days that he was well enough to go to Apple's offices, all he wanted afterward was to return home and have dinner with his family. Mostly, he spent time with his wife and four children - who will now oversee a fortune of at least $6.5 billion, and, take on responsibility for tending to the legacy of someone who was as much a symbol as a man.

"Steve made choices," Ornish said. "I once asked him if he was glad that he had kids, and he said, 'It's 10,000 times better than anything I've ever done.'"

"But for Steve, it was all about living life on his own terms and not wasting a moment with things he didn't think were important. He was aware that his time on earth was limited. He wanted control of what he did with the choices that were left."

In his final months, Jobs's home - a large and comfortable but relatively modest brick house in a residential neighborhood - was surrounded by security guards. His driveway's gate was flanked by two black SUVs.

On Thursday, as online eulogies multiplied and the walls of Apple stores in Taiwan, New York,Shanghai and Frankfurt were papered with hand-drawn cards, the SUVs were removed and the sidewalk at his home became a garland of bouquets, candles and a pile of apples, each with one bite carefully removed.

"Everyone always wanted a piece of Steve," said one acquaintance who, in Jobs's final weeks, was rebuffed when he sought an opportunity to say goodbye. "He created all these layers to protect himself from the fan boys and other peoples' expectations and the distractions that have destroyed so many other companies. But once you're gone, you belong to the world."

Jobs's biographer, whose book will be published in two weeks, asked him why so private a man had consented to the questions of someone writing a book. "I wanted my kids to know me," Jobs replied, Isaacson wrote on Thursday in an essay on a website. "I wasn't always there for them, and I wanted them to know why and to understand what I did."

Because of that privacy, little is known yet of what Jobs's heirs will do with his wealth. Unlike many prominent business people, he has never disclosed plans to give large amounts to charity. His shares in Disney, which Jobs acquired when the entertainment company purchased his animated film company, Pixar, are worth about $4.4 billion. That is double the $2.1 billion value of his shares in Apple.

Many people expect that attention will now focus on his wife, Laurene Powell Jobs, who has largely avoided the spotlight, but is expected to oversee Jobs's fortune. A graduate of the University of Pennsylvania and the Stanford Graduate School of Business, Powell Jobs worked in investment banking before founding a natural foods company. She then founded College Track, a program that pairs disadvantaged students with mentors who help them earn college degrees.

Jobs himself never got a college degree. Despite leaving Reed College after six months, he was asked to give the 2005 commencement speech at Stanford. In that address, delivered after Jobs was told he had cancer but before it was clear that it would ultimately claim his life, he said the benefit of death is you know not to waste life living someone else's choices. "Don't let the noise of others' opinions drown out your own inner voice. And most important, have the courage to follow your heart and intuition."

In his final months, Jobs became even more dedicated to such sentiments. "Steve's concerns these last few weeks were for people who depended on him: the people who worked for him at Apple and his four children and his wife," said Mona Simpson, Jobs's sister. "His tone was tenderly apologetic at the end. He felt terrible that he would have to leave us."

As news of the seriousness of his illness became more widely known, Jobs was asked to attend farewell dinners and to accept various awards. He turned down the offers. When one acquaintance became too insistent on trying to send a gift to thank Jobs for his friendship, he was asked to stop calling. Mr. Jobs had other things to do before time ran out.

"He was very human," said his physician Ornish. "He was so much more of a real person than most people know. That's what made him so great."

©2011 The New York Times News Service

Steve Jobs' last big project: iPhone 5

Source :TOI Tech | Oct 17, 2011, 06.10PM IST

Steve Jobs' last big project was not iPhone 4S, but iPhone 5, according to a news report. According to the CNet report based on a research note made by Rodman & Renshaw analyst Ashok Kumar, the next-generation iPhone "was the last project that Steve Jobs was intimately involved with, from concept to final design. For that reason...this product will establish the high water mark for iPhone volumes."

In the note, Kumar claims that the phone will have a slimmer profile and larger screen size but will have the same dimensions as iPhone 4S. 

The iPhone 5 is also expected to have LTE, or Long Term Evolution, commonly referred to as 4G.



The analyst anticipates that iPhone 5 should debut during Apple's Developers Conference in summer of 2012.
Quoting another source, the report says that iPhone 5 is a "complete redesign" which people worldwide were eagerly waiting for. Jobs is said to be not that involved in the Apple 4S because he knew "his time was limited."

Apple's stock fell as much as almost 5% at one stage, as Apple CEO Tim Cook unveiled iPhone 4S. Apple's newest iPhone failed to wow several of Wall Street analysts and Apple fans.

Bank of India files complaint against employee

Source :rupeetimes :Neelima Shankar :Oct 13,2011



The official posted in the Civil Lines branch of Allahabad has been accused of illegal transfer of funds worth Rs 34 lakhs from several accounts to a single account which turned out to be a fraudulous one.


The accused official named Ajay Mahendra is however absconding.


He opened the fake account in the name of Shahid Ali Siddiqui wherein he deposited funds amounting to Rs 34,66,000.


The fraud took place in the financial year 2009-10.

You have got (fake) mail from RBI

Source :Piyush Pandey, TNN Oct 12, 2011, 03.33AM IST

 A recent email doing the rounds, purportedly from the Reserve Bank of India (RBI), informs account-holders that they are in for a windfall as the central bank has decided to release unclaimed deposits to the beneficiary.

The email, the latest version of online frauds, is full of errors. It states that RBI governor D Subbarao met with the senate committee on finance, although there is no such committee.

RBI spokesperson Alpana Kilawala said the mail was fraudulent, there was no such communication, and Subbarao had not attended any such meeting. "We lodge police complaints when such fraudulent mails are brought to our notice. We have put up two advisory notes on our website asking people not to pay money to receive funds from abroad. RBI never asks for your bank account details."

Scams employed by fraudsters include one where the recipient is told to send funds to cover the cost of remitting proceeds of a lottery he has won.

 In another phishing scam, account-holders are sent a link to a website that looks like the genuine homepage of a bank site, but is a trap to record the useras password. International scamsters seek account details of individuals whom them entrap into acting as a˜money mulesa as a conduit for transferring funds stolen from other accounts.

The fake RBI email states that the recipient is listed as a beneficiary in the recent schedule for payment.

 "We are writing this email to inform you that 750,000 GBP {Seven Hundred Fifty Thousand Great British Pounds Sterling} will be release to you, as it was committed for (RBI) Governor that Beneficiary will have to pay crediting fees only. So you are therefore required to pay 24,500 INR ONLY. To credit your account immediately making a decline for 2 working day after date of receiving this mail. Also reconfirm/provide your bank account details-for crediting."

An earlier statement by RBI advised the general public against responding to offers of moneys from abroad. It stated that they are fraudulent and advised people to immediately register a complaint with the local police or cyber crime authorities when they receive such offers or become a victim of such fraud.