How Difficult it is do Business in India?
An example of the difficulty faced by the common Indian man to do business in India.
This personal experience is penned down to bring to the fore the difficulties that an honest taxpayer faces!
Background to the incident
I bought an office to extend my firm’s operations, about ten years ago-two offices of approx.2500 sft + 500 sft, in the course of the year, 2006. Around the time I took ownership of these, there was a conscious decision taken, to down size my business due to difficulties faced (read harassment) from Service tax authorities (I have already written widely on this issue in yahoo groups earlier). This decision came as a result of a realization that it was futile to do business, just to ensure payments to insensitive and corrupt government officials and in the process, face bureaucratic hurdles. Most of these interactions gave ample opportunities to these officials to trouble honest tax payers!
I estimated that for every Rs 100 that I earned, over 60% goes to government in some form or the other. These included Income tax, service tax and every other tax that I had to pay when I purchased anything. I was also of the opinion that it was not worth ‘earning’ for the government post retirement. I down-sized the company operations and as a result, I practically closed operations in Ahmedabad and kept only the Bangalore office open. Till date the Ahmedabad centre only remains as an R&D centre with no income. Coming back to the purchased property, I did not use the two units purchased- they are locked up and in the small office of 500 sft, where some of my old files from IIMA are stored. These documents were important to me, as I had no heart to throw the files away after I left IIMA and as I was carrying them from one place to another, it was an easier option for me to store these in the small office. The ordeal started when I received a ‘fat’ tax notice as property tax, which was due to the incorrect entry of occupied area by the municipal office. I had to send someone to get the details corrected and consequently the right tax amount as the property was an un-occupied space. This was all after my discovery in 2014 about the high taxes that we were paying from my Bangalore office. They did not know that for vacant space the charges are reduced by almost over 50%. Since I have literally no staff to assist me at TVRLS Ahmedabad, I took the onus to get this sorted out. I narrate below my ordeal which is indicative of the difficulties in doing business in India. I describe below the various trips made to Ahmedabad Municipal Corporation Office (AMC) to get what is due to the honest taxpaying citizens of Ahmedabad.
The real Ordeal begins…A detailed narration.
Trip 1: I met an officer to explain the issues faced. He suggested that I meet another concerned officer (or clerk- I will use the term officer with respect), who was not there on his table.
Trip 2: I met the concerned and showed him the tax bill. He advised that I purchase and fill a form for Rs. 2 with the requisite electricity bills.
Trip 3: I attached the bills and met him again. He saw the bills and said that I have applied for only one year while I am eligible with retrospective effect for all the years the office was vacant. He asked me to take another application and apply. He also directed me to the place where I had to deposit my application.
Trip 4: I had to do a lot of scouting to get all the bills of last five years and finally I completed the forms and took to him to confirm if all were in order. He checked quickly and said that theyare okay and gave me his cell number for assistance. My cell number was in the application submitted and he said he will call me whenever the issue was decided and until then I should not pay taxes for the current year as a lot of refund is due and it will cover all the taxes.
Trip 5: I did not get a call for several days. I didn’t want to call him on his personal cell number but decided to visit the office and find out the status. I went there and unfortunately, he was not available, post which after three to four phone calls he said that he was reviewing the case and would take a decision soon.
Trip 6: I went again to personally meet him to impress on him that the fine period has started for the current year and that I was eager to pay off the property tax. He asked me to come after a week.
Trip 7: I visited him again, after a week. I was told that the area has been assigned to another person. He gave me the number of the other personnel and asked me to meet him.
Trip 8: I met the new officer. The New Officer (NO) said that he was aware of my case and that he would do the needful and that I should contact him after a sometime as he has just taken over.
Trip 9: After a couple of weeks I went to see him. He said that the premises had to be inspected. I brought to his notice, that there were bills with zero electric consumption which were attached for his perusal and that this was sufficient to proof that the place was vacant. He said that it was important that the place be physically verified. I requested him that the office was locked and if he has to verify he should give me a call so that I can come and open the locked office and show him the property.
Trip 10: Two weeks later I again visited him, to request him once again, to visit the office and complete the checking. He said he will call me. He did not call me for another few days and all I could do is to send him reminders.
Trip 11:Finally, I got a call from him, asking me to come within 20 minutes as he was inspecting the nearby offices. I rushed and found two people- the concerned officer and his boss. His question was why I did not use the property, all these years or rent it out. I mentioned that, I did not want to give it on rent for the first few years and now when I want to give it I am not getting any tenant. His officer saw the files lying in the small office and concluded that the office was in use. I argued with him that they were all old files and I could have dumped them and vacated the room if I wanted to be dishonest. I was also told that he would go by his rule book and as per the rules if any unused material was found in the premises it would be counted as a used property, even if there was no electricity consumption for the last five years. However I added that I would pay the tax, if he still felt that this was not vacant, as we had paid for it in the past. It was also important to note that, the condition of the 2500 sft office was bad and it had leaks and worn out tiles. It did not need any intelligence to come to the conclusion that this was not in use. The same was true with the small office. I was told that I will hear their decision at a later date and that electricity bills could be faked. This was the reason that they could not come to a conclusion immediately. They also asked me why I did not inform them earlier and also mentioned that the claim could not be entertained for the previous years as there was no guarantee that it was not used earlier…. I had nothing to say!
Trip 12: I waited for their call and it never came. The property tax interest rate was going up meanwhile which increased my eagerness to pay it off. I called him again, twice to be told, that the officer was on leave. Losing my patience I went again to his office to be told that he was still on leave and that he had asked his colleague to sort out the matter if I visited them again. I was impressed that the new officer was nice enough to instruct his colleagues to sort out the matter. His colleague checked some files and mentioned that I had to give an affidavit on a 100 rupee stamp paper, stating that the office was not in use and in case anything contrary to it was found I will repay the amount of concession given to me. I argued with him that I have already made over ten trips and was losing patience. He took me to the boss of the officer who inspected my premises . Both of them had arguments among themselves and after trying to see my payment dues in the computer and hearing my argument that the interest on the property tax is going up as the last date is over, they said that for the small office of 500 sft there will be no concession as it would be treated as property under use. However the next one will be reduced and I should pay 50% of the tax for the bigger office, just to save myself of the interest burden.
Trip 13: I went to pay the amount indicated three days later as it took time to get the cheque from Bangalore office for the amount. The day I went to pay the payment, the receiving clerk mentioned that the amount on the cheque is Rupees 10 less, as the interest had gone up and if she accepted the money I would lose all concession, to be given on the matter. She refused to accept short payment. On the second case of 50% also she said the same. I then called my Bangalore office and asked them to pay off on line for the small office which they did. Prior to this, I would also like to add that when I called the officer to mention that I was misguided by his colleague, he replied back that it was my mistake to ask him for guidance as I should have come to him directly, as I was eligible for refund. As far as the small office was concerned, it was good that I paid all the money as I would not get any concession. For the bigger one I had already moved the papers and it was lying with the final authority and I would get a huge benefit. I also mentioned to him that if the need arises, I could take it up with higher authorities in AMC for which he said that there is no need.
Trip 14:A few days later I got a call stating that “ Your office was disconnected by Torrent Power” and that I would have to submit a certificate for the period of disconnection stating that the office power connection is disconnected. I proceeded to the Torrent office to request for the certificate. There at Torrent Power I had to wait in the queue for 30 minutes to get an entry pass to meet the concerned officer. Finally when I met the officer she mentioned that I need to apply for it on a separate form to get a certificate of disconnection and it would cost Rs 500 each within a time period of 3 to 5 working days.
I don’t know how many more trips I have to make to Torrent and to AMC to prove that the office is not in use for the last seven years, in order to get the concession I deserve from the money that I have paid to AMC like an honest citizen.
My request is…..Modiji are you listening?? Is this “Minimum Government and Maximum Governance” which is being professed in your own Home state and in a Municipal corporation that is administered by some of the most efficient civil servants??Post script:
I called the concerned officer a little while ago. He said that he will be in office this afternoon and I may come to see him. I told him on phone that I am left with no patience and energy to give him any documents and keep proving to every one that the office space is vacant and keep making trips to AMC and Torrent power. I also mentioned to him that I am going to write to AMC and also to PM Shri Modiji as I think this is not an exception and this is the way things are. He said, " if you are sick and can't come to AMC office and meet me I will come and meet you". I told him that I am not sick but sick of the procedures and bureaucracy and I have nothing against him or his colleagues, If any they have been helpful. Only they are not consistent and perhaps it is not their fault and that is the way the system is. The system is based on total mistrust of citizens and all services for which the citizens pay themselves don't trust them even in collecting money and giving what is genuinely due to them.
I am not writing to Modiji but am hoping some one who sees this blog sends it to his office more as an indication of the cleaning to be done in India. Perhaps the new Commissioner of AMC will simplify life to make citizens not to waste their time. A private company like Torrent will make life of their customers easy. Why can't we get details of all disconnection or connections on line if necessary for a fee and we have to cross so many hurdles to even know the procedure for getting a disconnection or re connection certificate.
Cleaning India requires cleaning our offices of this mistrust and accumulated over decades. It is not easy but we need to do this on a war footing to make easy and a pleasure to do business in India.
Labels:Maximum Governance, minimum Government, Bureaucratic hurdles, Indian Bureaucracy, Municipal Administration, AMC, Doing Business in India, Trust.