Leh Ladakh Tour

End of April, my son pointed out an advertisement in a local news paper saying visit Leh Ladakh for 4 nights / 5 days at Rs.22,000/- per person including Air Fare; and get family discount of Rs.2,000/-. Offer looked fabulous.

I thought there must a catch. Any way, I visited Make My Trip website and filled in a web inquiry form. Next day I got a call from Ahmedabad and lady on the other end said - seats are limited. I asked for available dates and checked on date in the first week of May. Paid advance booking amount of Rs.3,000/- per person through credit card using IVR (Interactive Voice Response). Of course, I got few nervous moments because my usual Credit Card could not be used - since it was expiring by April and new card could not be used because it would become active only in May! So, I tried 2 other cards and both would not go beyond the credit card number. Lady on the other end volunteered to enter the credit card number but again system would not accept valid up to date or CVV. So, I called up one bank and learnt that wrong CVV was entered. That's impossible - so I concluded that MakeMyTrip's IVR system had some noise or problem or they were up to some trick! Any way after few attempts I could manage to make payment through credit card.

Immediately I got an email giving booking number. I was told that I should make balance payment in 3-4 days. Then I just looked around to find out how reliable MakeMyTrip (MMT) people are. To my horror I found  that on one popular web site (GupShup) 80% people had written negative feedback about them. So, I spent some time studying the details and I was relieved to note that most were dissatisfied with service they received for air tickets. Only one feedback was there for their tours saying - time management was poor and restaurants were not good. So, I should give them benefit of doubt because  they could be better at tours.

So, I paid them the balance amount through Credit card - which had failed in CVV verification earlier - after having some trouble - as usual by now.

On the appointed day we all started for Delhi. Reached airport after braving the incredible traffic jam on Western Express highway. I had already done the web check-in for all 9 of us so that we could get some extra points from the airline. Before doing the same I had called up MMT to find out if I should do web check-in with 5 more people travelling with us on the same booking number. They were clue less and advised me not to do it. I asked for their phone number but they refused. So, I went ahead and did the web check-in for all - as group booking tickets don't allow individual web check-ins. Of course, before taking this step I made several calls to Kingfisher's group booking people. But to put it in nut-shell, experience was bad - first they were not picking up calls - when picked up found number had changed - again did not pick up - when picked up said I should call up branch group booking as they were handling national group booking queries - branch people said it's not in their hand to issue separate booking number for a part of a group - what a waste of time!!

Any way, we boarded the aircraft 2 hours later because incoming flight was delayed. We reached Delhi around 12.30 am. After coming out of airport after about 5 min of search we found the MMT representative. He was there with 3 cars. By the time we reached nearby hotel (Lohmod) it was 1.30 am. We quickly filled in Hotel Register, gave driving license for photocopy, collected room key, reached the room. It was 2.15 am. My son's complained that TV is not working! I found that his rooms intercom phone was not working. We complained but nothing happened. We did not care and tried to sleep for 2 hours  in a noisy AC environment - as we had to catch early morning flight of 6 am. We had tea and biscuits. Found there were only 2 cars for 9 of us. All left except me and my wife with 2 bags in hand. Fortunately 3rd car came after 10 min and we could catch the flight.

At airport there was a chaotic long queue. But our web check-in came to our rescue. We got out boarding passes out of turn and quickly ran through the security check and just reached in time to catch the flight. We reached Leh after a comfortable flight with a light break fast.

Leh is a small town at a height of 3,500 meters with hardly any tourists - even in peak season! One needs to take rest for 24 hours (at least) before one ventures out - even for a walk! Oxygen is just 15% in Air compared to 21% at Sea level. So, one's system requires 24 hours to get used to it. Also, it is recommended to take 1 tablet of Dyamox one day before and one on arrival. But, we were not told by MMT! This happened in spite of my calling them and specifically asking them about travel trips, pre-cautions etc. Even their website has an article on acclimatisation but not a word about this medicine!

And, one of our fellow traveller - who gave us this information and tablets also - said he learnt about it from an email sent to him by MMT. Clearly MMT does not have well trained staff to take care of tours.

After taking one tablet, after about 5 or 6 hours, I started experiencing vibrations on my face - particularly in cheek and forehead area. It vanished after a night's sleep. It was like a small helicopter running inside my head! It was definitely due to the tablet because for next two days I did not take the tablet and I was back to normal health. And, I took one tablet on 4th day and experience repeated. One doctor said may be I needed potassium and should take coconut water. But we got this advice around 8 pm and we could not find any open shops - since all shops close around 7 pm.

We heard that people who were to come in the next day missed their flight at Delhi. Due to some problem their booking was lost and had to stay in Delhi for 1 more day and take flight the next day.  Saving grace was that MMT arranged a free tour to Taj Mahal (Agra) for them and they arrived one day late.

Leh does not have any greenery. It's largest district of India - with 55,000 sq.km area and population of 2 lakhs! All hotels except one (Grand Dragon) close down after 4 months of peak season! It's a dreary desert land with un-predictable weather with heavy winds. I felts Wind farms can be set-up here to provide electricity to entire India - due to its vast expanse.

Pangong lake was too good but we could spend only 30 min - as it takes 5 hours to reach there and 5 hours to return and road condition is not good.  Its beauty simply can't be described. It's a 130 km long and 5 km wide salt water lake with no fish inside. It completely freezes in winter. Around 60% of its area is owned by China. Boating is not allowed. Some locals claim to have seen Chinese submarine few year's back in the lake! It's that deep!

On last day we had come back just before reaching the highest motorable road.

More later.

Picture Perfect Photo

Monastry

Future Buddha - Maitreya

Enjoying Snow fall at 15,000 ft

How can IT dept collect TDS when they can't give credit for the same to us?

Today we received Intimation u/s 143(1) for my wife from Income tax department for the year ended on 31-3-2008. Major source of her Income is salary and interest from deposits.

To our horror we noticed that although we had paid full tax (Advance tax, TDS deductions and Self Assessment tax) - she was served notice for payment for Income tax along with interest!!!

The delivery staff told me - "Do not worry, sir. There have been some doubts about TDS claims and as a precautionary measure department has not given credit of TDS. Ask your CA (Chartered Accountant) and show all original TDS certificates and you will get the correct order."

Upon simple inspection of the Assessment Order we noticed that except for the Returned Income figure none of the figures on the Assessment Order matched with the filed Return.  Upon a short telephonic discussion with CA, we were advised to approach the Income Tax department directly - as there are too many such cases and they are unable to cope up!

Wonderful. Isn't it? Would any one care to join the party?
 
As far as TDS is concerned we poor citizens have no say. At the end of the year we collect the TDS certificate from the deductor;  and claim credit while filing the Return. And we expect that it will go smoothly because TDS information is available online on Internet - for any one to see and check. But in India, it does not work that way.

What's the way out? Meet the CA or some tax expert personally, decipher every word written on the Assessment Order, write a letter to the Assessment Officer, submit it to the Assessing Officer - show original TDS certificates; and wait for the revised assessment order!

How a salaried class person is expected to do all this? Who will compensate citizens for all this un-necessary extra work?

I have never managed to understand rationale behind Tax Deducted at Source - particularly when we are regularly paying Income tax every year. If Government is not able to give credit for the collected TDS then it has no moral right to continue with the TDS collection.

I hereby urge every citizens of India to demand abolition of TDS. At least, it should be done for the regular tax payers.

What do you think?

Cost of outsourced work

For last few years outsourcing work is routinely adopted by companies to reduce costs. Now a days we see various non-core activities like after sales service, salary payments, marketing activities, claim processing, event management, house-keeping, physical security of premises and so on - are routinely handled by outside agencies. While cost reduction may be true in short run - there is a cost that a company pays for outsourcing its activities.

For example, look at the quality of service provided by outsourced agencies for After Sales Service. Is there any credible proof that outsourced agencies can offer to its customers that their customer's are served well and are happy with their service? I doubt.

Take this instance of a leading software product vendor who routinely outsources its Dealer Incentive scheme management to third parties.  Yesterday we learnt about a dealer scheme from this vendor's newsletter and clicked on the link to register for the same. And we got a Google advisory saying:

Site is listed as suspicious - visiting this web site may harm your computer.
Part of this site was listed for suspicious activity 1 time(s) over the past 90 days.

What happened when Google visited this site?

Of the 2 pages we tested on the site over the past 90 days, 2 page(s) resulted in malicious software being downloaded and installed without user consent. The last time Google visited this site was on 2010-03-13, and the last time suspicious content was found on this site was on 2010-03-13.
Malicious software is hosted on 2 domain(s), including waimaighaiphahxi.in/ , weedshop.org/ . 

I brought this to the notice of the Agency who was administering this scheme with copy to Partner Account Manager of the software vendor. In about 1 hour I got a telephone call from the Agency - a girl told me not worry - as we were pre-registered for the scheme!! When I asked her about Free Malware given out to the dealers upon registration - she feigned ignorance and said she will check up. There is no response from software vendor yet.

Few days back I had written to the same vendor's Senior Manager asking him if any quality checks are in place to ensure that all dealers are informed about the "schemes" launched by them and agency informs and distributes the incentives in time? After a reminder I got a email saying all distributors are advised to include my email id in all their communications to dealers! I asked him why have I not received the Incentive after 10 weeks of scheme closure - I've yet to receive any reply. Of course, I did not ask him about the schemes - which we did not know about - and lost out on incentives in this period of  4 to 5 months.

Take another example, recently we got cheque of more than Rs.1,00,000/- from one of customer through their outsourced agency - a bank - who makes payment to vendors on behalf of this party. Can you believe that this payment was already made to us few months back - as an advance payment after deducting TDS? When we pointed this out to the customer they asked for the cheque back by courier. Not a word of appreciation or complaint! Is this a routine? I believe so. Else how can you explain customer behaviour as noticed by us?

Believe me, this incident is not an isolated incident. We see about 1 or 2 incidents every year like this and return the cheques.

Un-used and expired Sodexo Gift Vouchers have no value?

Sodexo is a french company allowed to issue pre-paid Gift Vouchers in India. There is a guideline given by Reserve Bank of India giving directions for their operations. It's published in April 2009 under "Issuance and Operation of Pre-paid Payment Instruments in India (Reserve Bank) Directions, 2009".

We had got this Sodexho Gift Vouchers in 2006 from one of the Vendor as an Incentive. We thought we had used it all. But recently - while clearing cupboard - my wife found unused Gift coupons worth Rs.2,600/-. They had expiry date of 31-12-2006.

When I approached Sodexo they said nothing can be done about them as everything has been accounted for so far and accounts are closed.

When I read the RBI directions- it says following:

Issuance and Operation of Pre-paid Payment Instruments in India (Reserve Bank) Directions, 2009

April 27, 2009



9. Validity
9.1 All pre-paid payment instruments issued in the country shall have a minimum validity period of six months from the date of activation/issuance to the holder.


9.2 In the case of non-reloadable pre-paid payment instruments, the transfer of outstanding amount at the expiry of the payment instrument to a new similar payment instrument of the same issuer, purchased by the holder may be permitted.


9.3 The outstanding balance against any payment instrument shall not be forfeited unless the holder is cautioned at least 15 days in advance as regards the expiry of the validity of the payment instrument.


12. Customer Protection Issue
12.1 All pre-paid payment instrument issuers shall disclose all important terms and conditions in clear and simple language (preferably in English, Hindi and the local language) comprehensible to the holders while issuing the instruments. These disclosures shall include:


i) All charges and fees associated with the use of the instrument.


ii) The expiry period and the terms and conditions pertaining to expiration of the instrument.


iii) The customer service telephone numbers and website URL.


12.2 An effective mechanism for redressal of customer complaints shall be put in place by the entity issuing pre-paid payment instruments.

So, I asked them if Sodexo had given 15 days notice to me (as holder) as per direction 9.3 and also inquired about "effective mechanism for redressal of consumer complaint". They had no answer. They noted my contact number and promised to revert. This happened about 4 days back. Before that, I had written an email to the address they have put on the web site in first week of Feb 2010. But, so far, there is no reply to my email.

I feel that such companies - who are authorised to issue pre-paid  Payment Instruments i.e., Gift Vouchers must be making a lot of money due to such expired and lost Gift vouchers. But RBI guidelines is not detailed enough to stop such operations. What to do?

Update (21 April 2010): After some telephonic follow-up Sodexo agreed to issue revalidated Gift Vouchers. I've sent the original Gift Vouchers to their Mumbai Office. I should get it in 21 days.

Excessive electricity bills paid for 10 years due to a defective electric meter

We were suspecting our electric bills to be high - so after several complaints starting from Feb 2009 - meter was taken for testing in Aug 2009 and found to be defective. Meter was found running even when mains supply was switched off. Reliance gave us 20% refund for 5 months starting from Feb 2009 based on Meter test report - which had tested meter for 10%, 20% and 100% load at Unity and 0.5 lag Power Factor. Average Percentage Error of this 6 readings was 20%.

We went to Grievance Forum - they gave order for 20% refund for additional 3 months - as per MERC regulation. But, our current (new) meter reading shows reduction in consumption of units by 61% compared to old meter. This is in spite of the fact that consumption pattern has remained unchanged - before and after the meter change.


So, we're thinking of approaching Ombudsman for the same. But problem is that of MERC regulation - which states following (relevent provisions are reproduced below):

-------------
MAHARASHTRA ELECTRICITY REGULATORY COMMISSION

Maharashtra Electricity Regulatory Commission (Electricity Supply Code and Other Conditions of Supply) Regulations, 2005

15.4 Billing in the Event of Defective Meters
15.4.1 Subject to the provisions of Part XII and Part XIV of the Act, in case of a defective meter, the amount of the consumer’s bill shall be adjusted, for a maximum period of three months prior to the month in which the dispute has arisen, in accordance with the results of the test taken subject to furnishing the test report of the meter alongwith the assessed bill.:

Provided that, in case of broken or damaged meter seal, the meter shall be tested for defectiveness or tampering. In case of defective meter, the assessment shall be carried out as per clause 15.4.1 above and, in case of tampering as per Section 126 or Section 135 of the Act, depending on the circumstances of each case.

Provided further that, in case the meter has stopped recording, the consumer will be billed for the period for which the meter has stopped recording, up to a maximum period of three months, based on the average metered consumption for twelve months immediately preceding the three months prior to the month in which the billing is contemplated.
-----------

I feel that meter was running fast since May 1999 - when we had shifted over from Single Phase to Three Phase supply.

So, problem we are wondering is from where and how to get refund for a fast running meter for almost 10 years? Any sugestions?

More on "Ubuntu on Desktop" experiment

After reasonable success with the usage of Ubuntu 9.10 on my desktop - for about 2 weeks, I gathered courage to replace PCQuest Linux 2005 with Ubuntu 9.10 on one more PC.

It is a P-IV 2.4 Ghz, 1 GB RAM, 80 GB harddisk, Intel 845GSVR motherboard and DVD writer. The installation would start fine but would freeze after 3-4 minutes of disk activity. It won't even reach hard-disk partitioning stage. After many attempts, installation worked in Safe Mode. But, after that no matter I did, I just could not make it work in better resolution than 640x480. Installed latest updates worth about 110 MB. No luck. Installed earlier Intel 2.4 graphics drivers. No luck. Tried even manually configuring 'Monitor' section of xorg.conf file. No luck. Gave up after lot of trial and error.

Took out Ubuntu 8.10 Desktop CD from the cup board and put it in the DVD drive. It installed without any problem with full resolution. But, it would just freeze after entering user name password. Found solutions on a blog on the issue, got around the 'compiz' problem by removing this special effect from the desktop appearance. Ever since it's been working like a breeze.

Installed latest updates about 210 MB!!! Ubuntu Software centre even says Ubuntu 9.04 is available. What about 9.10? May be it's not stable release yet!

It has Open Office 2.4. Tried to get version 4.1 but menu system does not have any option to upgrade, as mentioned in the online help. 'Add remove' feature allows just removal of Open Office 2.4. Do I have to uninstall and then re-install? Not sure.

Samba network shares on the Nitix Server works without any problem. What about printing on NetWare printers? Not tried yet. It's working well on other PC running Ubuntu 9.10 with some effort. Of course, it was not printing 2 days back. The print job would just not get released to the Novell NetWare print queue and insist on waiting for 5 minutes. Why? No idea. Even when I manually released it, the print job would again would go in 'wait' for 5 minutes. I gave up then. But it printed properly today. May be it required a 'shut-down' like our good old friend. Well, surely with this feature, Ubuntu will make it in the big league since it has already 'shut-down' before it works mentality some-where in it's spinal cord.

Few things that required lot of search and work and may be it's working now on Ubuntu 9.10 - persistent connection to Samba Network shares. Before this I had to connect to it manually. After manually editing few conf files it's working. But it's far from perfect. I'm unable to get the Samba Network shares on the Nautilus File browser. For example, say I'm in gmail in FireFox and composing an email and want to attach a file on the Samba Network share. I'm just not able to do it directly. I've to copy the file to the local drive and then only able to attach it.

Also, I notice that I'm unable to move e-mail messages in Domino Web Access client 7.0 to domino mail folders. Even I'm unable to attach file attachments or save message to folder while sending mails.

So, I searched if any Notes is available natively for Linux. I found that it is available for Debian but it will not work on Ubuntu 9.10. Bad luck. I found that it works on Ubuntu 8.10 and 9.04 but not on 9.10. In fact, because of this reason alone I decided to quit Ubuntu 9.10 on other PC with low resolution problem and installed 8.10. Of course, I've yet not tried Notes client installation because I'm not sure where to get the Notes Client for Linux. Nitix (now Lotus Foundations) does not offer Linux client on the download site. IBM site offers only 90 day eval copy. Too bad, I've licensed copy of Domino running on Nitix (LFS 1.1) but I'm unable to get Notes Client for Linux (debian). That's about how well IBM has got Nitix in to it's fold!!

Few thoughts on Ubuntu as a desktop OS. Ubuntu will put fear of God in to Microsoft. Well this quote is adopted from a PC Magazine article that I had read when it had reviewed newly released Microsoft Excel spreadsheet on Windows. The title was 'Excel will put fear of God in to Lotus 1-2-3'. Well, you know how the situation is now? Young ones ask what is Lotus 1-2-3? They don't even know about existence of Lotus 1-2-3 spreadsheet!!!

There was a time when Lotus 1-2-3 was a un-disputed king of spread-sheets in the DOS world. In fact, I'm unable to even recollect name of un-disputed king of Word Processor in DOS days; and even for few years in Windows era. Such is our IT technology world. Software, Technology, Ideas and People become obsolete very fast in today's world.

So, Microsoft (actually, Windows) better watch out - now Ubuntu is on the scene - alive and kicking.

Well, more on Ubuntu later.

Magnetic north pole is shifting eastwards 40 miles a year

Today I read a news in Mumbai Samachar (Gujarati daily) saying Mangetic North Pole is rapidly advancing eastwards - towards Russia - at about 40 miles (68 kms) a year. Interesting!

Then I came across a 24 Dec 2009 daily news in National Geographic, which is the source of this news item. The article says following:

A rapidly shifting magnetic pole means that magnetic-field maps need to be updated more often to allow compass users to make the crucial adjustment from magnetic north to true North.

Wandering Pole

Geologists think Earth has a magnetic field because the core is made up of a solid iron center surrounded by rapidly spinning liquid metal. This creates a "dynamo" that drives our magnetic field.

(Get more facts about Earth's insides.)

Scientists had long suspected that, since the molten core is constantly moving, changes in its magnetism might be affecting the surface location of magnetic north.

It's predicted that magnetic north and south poles will be reversed, but not in near future. Well, process of magnetic pole reversal has accelerated now.

Defective product replacement experience within warranty period

Generally speaking, in India, customer is at a receiving end while asking for replacement for a defective product within warranty period. I shall narrate my experience, one bad and other slightly good.

It's a experience most people in India would agree and say it's not new - it's common. Any way, draw your own conclusions.

We had purchased Creative's EP-630 Ear-phone from a dealer in Lamington Road at about Rs.850/-. After few months, it became defective. When we contacted dealer, he said warranty is only for 2 months. I pointed out to him that on Creative's web site, it's written as 1 year. He said we don't get replacement from the distributor. I contacted distributor - Cyberroam. They said warranty is for 6 months from the date of manufacture. When I saw the date on the box, 6 month had just got over. I pointed out to them that Creative's warranty is for 1 year from date of purchase but they refused to acknowledge same saying it's only for 6 months from the date of manufacturing.

So, I wrote to Creative, Singapore. First they confirmed that warranty is 12 month from the date of purchase. They asked me to contact dealer/distributor. Then I convinced them that they are unwilling to do anything. So, they shipped replacement piece, EP-830 (which was one level higher and slightly costlier) by ordinary post. After waiting for 6 weeks, I informed them that it has not reached. So, they shipped second piece, again by ordinary post, in spite of my telling them to send by other means because their replacement policy did not allow shipment by courier. Again after waiting for about 5 weeks, I wrote to them to give details of shipment. They sent it to me and I registered complaint with Indian Post and sent them details of the same. Also, I advised them to give complaint at Singapore.

After that they sent me third piece, but this time by FedEx courier (priority) and sent me the shipment number. I got it on the 3rd or 4th day without any problem. Of course, it was not in the usual box packing. Earphone was kept inside a simple plastic bag inside an envelope.

Other replacement is about Transcend DDR RAM - 256 MB. We had purchased it at about Rs.2,500/- a piece. At the time of purchase dealer said it carried 3 year warranty. After about 3.5 year, PC started giving problem i.e., it would arbitrarily shut down or hang. After lot of trial and error, we found that it was one of the two 256 MB RAM that was problematic. Upon close inspection, we noticed that small portion of it's leg (that goes inside the PCI slot) had a defect. When we contacted the dealer, he said DDR rams are not available and warranty is also over.

So, I checked the Transcend's website and entered all details. Upon checking warranty details, I found that is carried life time warranty. So, I contacted Transcend for warranty replacement. They confirmed by return mail that my RAM had life time warranty and I should contact distributors. They sent me details of their distributors and I contacted all of them one by one, not knowing from whom the dealer who supplied to me had bought from. Two distributors, who were in Mumbai, when I sent the RAM to them, said they had not sold it. When I asked them details of the Transcend Warranty Replacement Centre, one said there is no one, we only give replacement for units we have sold. Other said there is one in Tardeo A/c Market but did not have any more details.

So, I wrote about this to Transcend, Taiwan. After about 2 weeks delay they sent name and address of Accel Frontline's warranty replacement centre. I sent them the defective RAM, they gave receipt and said contact in 1 week. After 1 week they said replacement is ready, send some one. When we collected it back, we found it was just returned as it is! When we contacted them, they said it was out of warranty, so it was returned. When I wrote about this to Transcend, some one called up from Chennai, saying please send it again because there was a mistake in number entered.

After initially insisting on their collecting the defective item from me, which did not do in spite of my writing to all concerned people and talking to them, I sent it back. They have online system of checking the status. For about 2 weeks, it kept on saying 'checking warranty'. After that it showed 'out of warranty'!!! When we told them the whole history and also told them that we had given proof to them from Transcend that it was under life-time warranty. Then they said, they are waiting for replacement to come. After few days, we noticed that Accel Frontline's website did not have any references to 'Transcend'!!! When we called them on phone they said the reference number had changed and we should contact them after some time. That's last we heard from them. It's been almost 2 months. We have written few mails to Transcend, some of which they forward to Accel but no response from Accel Frontline.

After few months of follow-up on phone, finally we got a brand new DDR-333 256 MB RAM in original packing.

Update Oct 2014
One more Transcend DDR RAM - 512 MB started giving problem by rebooting the PC. I checked the warranty status on Transcend's website by keying in the Serial number. System said it is having Life Time Warranty.

http://in.transcend-info.com/support/verification

---------------
Transcend Part No.TS64MLD64V3F5
Product Description 512MB DDR 333 U-DIMM 2Rx8
Serial Number xxxxxxxxxxx586
Warranty Until Life Time Warranty
---------------

Once again contacted Accel Frontline and got response that as per Transcend's policy they don't accept any RAM module with capacity less than 1 GB! So, I made a complaint on Transcend's website. I got mail reply that I should contact Accel Frontline in Mumbai. After number of mails back and forth - I got a mail from Taiwan that they have spoken to Accel Frontline and we should give the faulty RAM to them. After showing them printout of mail they accepted the faulty RAM and gave receipt. They said replacement would take 2 to 3 months. Let's see what happens.

This is the deal customer gets in India for warranty replacement.

Started New Year with Ubuntu (what is that?)

In past, I tried to switch over my desktop to Linux number of times. I tried SLED 10 (Suse Linux Desktop 10), Fedora 8, PCQuest Linux 2005 and finally Ubuntu 9.10.

But, before gathering courage to try out Ubuntu, it was my tryst with Nitix 5.0, which gave me courage and confidence. About 1 year back; I was seriously looking for replacement for Novell NetWare 4.2; which has been going on non-stop for last 10 years; and earlier versions of NetWare (2.2 and 3.2) for previous 8 year or so. Actually, it will go on for another 25 years, if the server on which it is running won't fail. Even, the server (HP E-45, PII 300 Mhz, 64 MB RAM, 4 GB SCSI hard disk) is running for last 11 years with only component failed being 4 GB Tape Drive. I suppose it would run for another 5 years or so. But our accounting software (Work Horse) has outlived it's useful life. So, last year we switched over to Tally ERP 9.2 (finally).

At that time, we signed up with Nitix as their reseller by purchasing Not For Resale copy of Nitix Blue (Nitix - proprietary Linux with Lotus Domino 7) 5 user. We bought a brand new HP ML-110 (Xeon 1065 Server with 1 GB RAM and 2 x 160 GB hard disks, 1 DVD ROM) for the same; at an unbelievably low price. It got installed in 30 min but learning this new animal (Server OS) took us about 1 year. Was it worth? Yes, it was worth it at the end.

In this one year, we migrated e-mails in cc:Mail r8 stored on NetWare 4.2 to NitixBlue (Domino 7) via Notes 5.0. It was daunting work but it worked with few problems. Then we shifted data from NetWare to Nitix's Samba server. Configured MTNL's Triband connection with Nitix Server. Got Firewall and VPN working. So, I could access my office emails even from Home and anywhere from the world through Internet. Backup became automatic because Nitix's backup automatically backs up all files on the first hard-disk to the 2nd hard-disk automatically. It take full backup once a week at 11 O clock on Sunday night. And incremental backup every 1 hour (default settings - which can be changed).

In this one year, Nitix got bought over by IBM. IBM calls it Lotus Foundations Start. So, we upgraded NitixBlue 1.1 (Nitix 5.3) to Lotus Foundations Start 1.0 (Domino 8.0) and 1.1 (Domino 8.5). Transition was smooth technically. But, lot of things changed when IBM took over. First, IBM would not recognize our NFR (Not For Resale) copy. At the time of renewal, they asked us to purchase renewal subscription at regular price (like a normal customer). But partner web site said we could get free subscription renewal and we should get in touch with IBM Manager. IBM Manager said free renewal was only for US and CANADA resellers!!! Why? May be color of their blood is 'blue'!

What's good part? Product is working well, without the usual dose of updates (available only for valid subscriptions). It's like NetWare 4.12. Rock Solid. It would work even when main hard-disk would fail; because backup drive would automatically switch over and start working as first hard disk.

OK. That's long and short of our experience with proprietary Linux on the Server. Having got confidence of mastering a linux animal; I ventured to try Ubuntu 9.10. It came with the Digit CD (Dec 2009). Made Ubuntu 9.10 Desktop boot disk and installed on a brand new HP ML-115 Server (AMD Quad-Core with 1GB RAM and 160 GB hard disk). Installed in 15 minutes. It recognized everything correctly. Worked like a charm. Then installed Win 7 RC on another partition. It also installed and worked flaw-lessly. I gave that PC to my son for his use at the engineering college. When he learnt that I had installed Ubuntu he grumbled. I booted the PC in Ubuntu and he could not find out that it was not Windows 7. He keep saying it does not support 'EXE' files. But when he saw number of programs meant for engineering students, he was shocked. He took the PC to his hostel with both OS on it.

So, I ventured to install Ubuntu 9.10 on another PC (P-IV 2.4 GHz, 768 MB RAM, 80 GB hard-disk with DVD Writer). It installed in 20 min. Recognized even 20" LCD Wide Monitor (AOC) and automatically sensed 1600x900 resolution and started working. Have you seen this happening on a Windows PC? I doubt. I bet.

I decided to dump good old friend in favour of new found friend Ubuntu. In African language Ubuntu means 'Humanity to others'. So, with Ubuntu we don't win but we live in peace with others. Isn't it great?

Saw '3 Idiots' movie

Last week saw '3 Idiots'. Theater was packed. Very entertaining. Too good. Re-lived many moments of my stay at IIT Bombay. Movie has some really good messages like 'we go to college for learning and not for grades'. 'Enjoy your work, money will be incidental then.' etc.

People just love the movie. If I were to give title to this movie, I would say, "Ajab Dil Ki Gajab Kahani'. It was all about 'heart' ruling over 'head'. Through and Through it was same thing.

But, wait, people don't do this in their real life. In real life, it's almost always head ruling the heart. Isn't it? Then why people love this movie? Because here they see what should be. Vicariously they feel relieved for their inability to allow 'heart' over their 'head'. They feel nice and feel money well spent because it relieves them of the guilt.

In fact, I almost agreed with one critic who said "it's a time-pass". In other words, feel nice and get back to your usual way.

Idea to conserve water discharged from Flush Tanks

This year there has been a threat of water scarcity looming over the city of Mumbai. Municipal Corporation of Greater Mumbai (MCGM) is seriously looking at ways and means of conserving water. Given below is my idea which could save tons of water, if implemented.

Recent flush tanks are coming with 2 knobs - one for half discharge and other for full discharge. But, even half discharge knob releases substantial volume of water. I learn from few minutes of Internet search that at least 10 to 15 liter of water is discharged with each press of the knob.

Yesterday I got a simple but good idea to reduce volume of discharge from Flush Tanks. Implementation is easy and would easily conserve about 2 liters of water per discharge.

You will require:
1. A plastic bag which can hold say 1 or 2 liter of water. Ordinary Milk bag or small size plastic carry bag would do.

2. String (Plastic, preferably) 6 to 8 inch long

Step-1:
Take a plastic bag. Fill it with water. Tie it up with the string at the top. Ensure that water does not leak after tying it up.

Step-2:
Open the lid of the flush tank. In most cases, it should be easy. Now, insert the filled plastic bag inside the flush tank, in the empty space. Close the lid.

If tank size permits, you may insert more than one filled plastic bags.

Note: In flush tanks with two knobs, you may have to lift the knob, locate a plastic screw. Open it up using a screw-driver. Pull out the knob, plastic screw assembly. Lift the lid.

It's done. Now, every time you flush, discharge would be reduced to the extent of size of the filled plastic bag.

I've already implemented the idea in all the flush tanks of my house. Here is a video.
How to reduce volume of flush water discharge video


Let me know, if you like the idea. Also, let me know if you have suggestions for improvement.

Slow, steady and sure death of the Packaged Software Industry in India

It takes Government of India to create a huge great mess - which even God can not create with all powers to His command. Why don't for a while, it keep its hands off on matters it does not understand well? I'm referring to IT software and its delivery models. If they don't understand it, helping hand is extended to them from ISODA (Infotech Software Dealers Association - http://www.isoda.in/), but who wants to acknowledge that a mess is created; and clarity is due to the citizens of India?

Let me put it in plain terms. Government of India (that includes bureaucrats and politicians, all together) is out there to kill the proverbial Golden Goose. They have found the proverbial whipping boy in Indian Software Industry. Whether it's Income tax department, Customs/Excise/Service tax department, State Government's Commercial Tax (VAT) departments or even local Municipal Corporations - it's all same. They are utterly clueless about how to tax (in other words, get their cut) from the neo rich Software Industry. They don't understand it, they don't want to understand it; and they are doing a pretty ugly job. And people are fad up of them.

Let them understand, if at all they want to understand, that due to their acts prices of packaged software have gone up by 30% to 40% compared to what they were in May 2008. And people have reduced purchase of packaged software by more than 40% since then. One reason is they can't afford to pay more for (already) costly packaged software. Another things is that they are willing to take risk associated with piracy. Simply because friendly neighbourhood computer supplier OR systems integrator OR facilities management contractor is ever ready to oblige him.

And, if one is in self service mode; and is willing to do little research on Internet, hundreds of sites are available to supply free download of software. Not to forget that they don't forget to send virus, malware and trojans free of charge to you along with the software download to keep their operations going! Thousands of sites are there offering cracks to bypass vendor's activations. Hundreds of well written articles, videos and tutorials are there telling users how to use the latest and best software products free of charge without worrying about vendor's detection and activation.

Can Government do anything to stop this? I'm afraid, even with their best intention, vast machinery and power they can't stop it. Industry is trying its bit but they are also on the wrong track. First they have get their pricing, licensing and distribution model right. But, unfortunate part is that 'god fathers' of software industry are sitting overseas in comfortable high rise offices, with very little knowledge of ground realities in India.

Only way to stop this slow and sure death of software industry is to bring back sensibility and become reasonable. People are there to pay taxes and high prices, but don't corner them. They are ready to purchase packaged software products provided tax rates are reasonable, laws are clear; and they are not threatened by the vendor to purchase the packaged software. No body like ambiguity and threats - least of all - a common man.

Don't think that with GST (Goods and Services Tax) this confusion will be laid to rest. Sorry. I don't agree because first of all there is no clarity whether packaged software is a goods or service. And in GST there are going to different rates of tax for Goods and Services. If 'packaged software' continues to be both goods and a service then even GST won't able to help it.

In Income tax, there is even a bigger problem. Income tax department wants to tax income from sale of software products saying it is a 'royalty' income; and not a business income. Why? Simply because business income of a overseas supplier is not taxable in India. For example, when HP from USA/Singapore sells computer hardware to a distributor in India, his income is taxed in USA/Singapore and NOT in India.

But as per prevailing laws of India, 'royalty' payment made to overseas supplier is taxable in India. Income tax law is extremely complex and confusing with respect on 'royalty' income. So, Income tax department says that payment made to overseas supplier towards purchase of IT software is a 'royalty'. So, the supplier has to pay tax on the same in India. Income tax department wants its pound of flesh from the hapless software industry. You will say, so what's issue? That means importer is required to pay 'withholding tax' to Income tax department when a software product is purchased from the overseas markets, even when purchased through Internet.

What happens when the overseas supplier refuses to pay 'withholding tax' to the purchaser? And what happens when the payment is made through credit card to the overseas supplier? Of course, person who has purchased it pays the tax from his own pocket, a tax that supplier should have paid. Isn't it ridiculous? But, it's true.

There are simply too many factors working to ensure slow, steady and sure death of the packaged software industry in India. Let me try to list them here below, not in any particular order.

1.  High prices of packaged software products
2.  Ever changing and unclear channel /distribution policies of Vendors
3.  Attitude of distributors towards channel partners
4.  Unreasonably high taxation

a.  10 - 20% Withholding tax on import payment - depending upon country of origin
b.  8% CVD on Media
c.  10% Service tax on 'Right to Use' portion of software at the time of import
d.  10% Service tax on Resale
e.  4% VAT on Resale
f.   3 - 5.5% Octroi / Entry tax on Resale
g.  10% TDS on payment from the supplier
h.  10% Service tax and 10% TDS on Incentives, Rebates and Overriding Commissions

5.  Widely fluctuating Indian Rupee to US Dollar Exchange rate
6.  Reluctance of overseas suppliers to pay withholding tax; particularly on Internet
7.  Easiness of Piracy due to easy availability of resources
8.  Attitude of people i.e., we will manage, when it comes
9.  Channel partners who are happy to be in transaction mode with very low margins and high risk - from Government due to taxation compliance, vendors due to changing channel policies
10.  Poor unity and low communication and collaboration among channel partners
11.  Vendor's direct contact and control on the customers
12.  Direct selling by the distributors to the end users

What's 13th factor?

Online photo print service in India

In USA and many other countries, online photo print services are quite an established business. But, recently I discovered a good quality service provider based out of Mumbai, India.

When I saw their mailer (e-mail) they said they would give 10 No.s 4x6 prints free. Yes, you read it correct - FREE!! I checked that they were based out of Mumbai and decided not to make any payment to them by credit card. They had option to pay cash at one shop located quite close to my office.

So, I went ahead and uploaded 10 best photos of my Kashmir tour and ordered the prints. They charged Rs.25/- plus tax as delivery charges. They sent a number through SMS to my mobile phone; went to the shop, made the cash payment and they issued a receipt of Rs.28/- or so. And within seconds I got SMS saying money was received and prints would be delivered in few days.

It did come - as promised to my place. My first and second impression about this service (http://www.zoomin.com/) is too good.

Today I got an offer saying if I order 1 photo mug, I get second mug free. I ordered 4 mugs with 4 Kashmir photos and fitting caption. All customised. This time I decided to pay through Credit card. This site has Thwate SSL certificate and after accepting my credit card details over a secure SSL connection; transferred control to my bank's website for another verification, and control came back to www.zoomin.com after verification. So, that's how the payment part got over without any problem.

Usability of website is too good to be from India. They allow unlimited photo uploads. You can create albums for private and public use. You can order prints not only on paper but on mugs, t-shirts, calenders etc. etc.

Kashmir tour

After many posts letting out my steam, I'm posting beautiful pictures of Kashmir valley.

It's a long journey from Mumbai, when you travel by train and road. But it is worth every meter you have travelled. It's truly a heaven on earth.

I liked the people there. They want peace and stability as much as rest of the world. Let's pray that peace and tranquility will prevail in this part of the world.

Kashmiri family traveling in Daal lake


Water skiing in Daal lake


Mughal Garden in Srinagar

River in Sonmarg

Mountains in Sonmarg

Houseboats in Nageena Lake with reflection in water

Beautiful view in Gulmarg

View of hotels in Gulmarg

View of mountains in Pahelgam

River in Pahelgam

Pictures taken with Kodak 8 MP camera with 3x Optical Zoom.

Why pay Service Tax on Packaged Software - to be on the safer side?

In India, the taxation and legal system is very complicated, extremely slow and quite expensive in terms of money and time.

So, whenever there is an ambiguity on the applicability of a particular tax or law - usual advise given by Tax Consultants is - "we feel this - this and this ... - but to be on safer side pay tax" i.e., collect from the customer and pay to the government. After all - it's the poor customer who pays!!!

And bigger the company seeking the advice - bigger is the consultant i.e., all MNC's seek advice from one of the big four management consultants. Never mind what their track record is. We have seen fate of number of global consulting organizations and their customers in the last 7-8 years. Not only consultancy organizations but even their top notch MNC customers have gone out of businesses. So, much about the big consultants and their advice!!

So, it's time that we start using our brain and innate wisdom to understand the tax/legal issues on hand and devise ways to tackle the issues. Times are tough and going forward - it's going to be tougher. So, it's time that we get out of our cosy comforts and forget about being safe and start learning to take stand, devise a strategy to fight the outcome of the stand and fight out - when required.

Take the issue of double taxation that has shaken the entire Software Industry in India. It has applied a 'brake' and changed the 'gear' from 5th to the 1st gear - without pressing the clutch. Any one who knows how to drive a four wheeler would understand what's fate of such an action.

Some people think that Indian Government has done this intentionally. It's done with a intention of milking docile IT customers and IT Software Houses of their hard earned money. And Government is not in a mood to offer quick corrective action. They want as much money as possible in the government coffers - so that they can pay the farmers and arrears to government employees as per 6th Pay Commission recommendation. And you know very well why all this is done - of course, to get votes in the next election and stay in power for another five years. All this in the name of democracy. It's a shame on us that we take all this lying down.

Consider this case a little deeper to examine - what's implication of both taxes applied simultaneously on the sale of a packaged software product?

It leads a question - whether 'Service tax' and 'VAT' is to be paid on 'basic price' simultaneously or one after another. If applied simultaneously - we are thrown back by 25 years to age old system of manual book keeping because modern Accounting Packages can not handle it. If you are using modern ERP packages then you will need to hire services of costly and time-consuming ERP consultants to modify your billing system. And they will take couple of months to carry out the necessary changes to your billing and accounting system.

If you apply it one after after then question arises - which comes first? VAT or Service tax. Fortunately, there is a consensus among tax authorities that Service tax comes first because it's a Central Government tax (like Excise) and VAT comes next. So, you pay Service tax @ 12.36% on basic price and then charge VAT on the total of basic price and service tax.

So far so good. But, bigger issue to be discussed and settled is whether Service Tax is applicable on the sale of packaged software or not. This is because as per Finance Minister's budget speech and a letter written by the Service Tax Commissioner - Service Tax is applicable on tailor made software and Excise/CVD is payable on the packaged software.

So, it is time to decide whether software resellers are selling tailor-made software or packaged software. Once they are clear about this point they will be able to convince all parties viz., government, distributors and vendors - that Service tax is NOT payable on the packaged software.

In this context, if any one is having any doubt, please read clarification given by Tax Research Unit (TRU) vide D.O. F. No.334/1/2008-TRU dt.29-2-2008:

..
4.1.5 Software and upgrades of software are also supplied electronically, known as digital delivery. Taxation is to be neutral and should not depend on forms of delivery. Such supply of IT software electronically shall be covered within the scope of the proposed service.….
..
4.1.7 Following consequential amendments in other taxable services are also being made: To clarify as removal of doubts that ‘Management, maintenance or repair of properties’ includes Management, maintenance or repair of IT software [section 65(105)(zzg)]. Maintenance of packaged software (being goods) is also leviable to service tax under the said service.

Notice "taxation is to be neutral and should not depend on forms of delivery" and "packaged software (being goods)". So, when we sell packaged software supplied vide different forms of delivery viz. Shrink-wrap, OEM, Paper license or Internet download, it's all same viz. packaged software. Packaged software (being goods) - attract VAT. So, there is no Service tax.

Once we all (dealers, distributors and vendors) are clear and are all united on this issue we could take a stand as an industry and we all should collectively refuse to pay Service tax to government. If government wants Service tax then let them demand it.

Currently we all are assuming that government wants Service tax on packaged software and we are paying it. But indication is otherwise i.e., government's original intention was to levy Service tax on the Tailor-made or Customised software only. Same thing was said in the Finance Minister's speech also.

While presenting the Finance Bill 2008 he said: “I propose to increase the excise duty on packaged software from 8 per cent to 12 per cent to bring it on par with customized software which will attract a Service tax of 12 per cent.”

I've learnt from a customer that he had some verbal discussion with the Commissioner of Service tax. In that Service Tax Commissioner confirmed that Service tax is payable only on the tailor made software. He even said that his field staff does not have mandate for the collection of service tax on packaged software products.

BUT WE ALL ARE PAYING SERVICE TAX ON PACKAGED SOFTWARE - RATHER FOOLISHLY - TO BE ON SAFER SIDE.

WHOSE FAULT IS IT? It is time we start thinking like Legal Experts and Court Judges viz., what is the intention of government in bringing IT Software Services in Service tax net? And whether it is correct to charge two taxes on same item viz., Packaged IT Software .

Believe me, in case of doubts, even our constitution rules in favour of the tax payer and not government.

“Service tax is imposed under entry 97 of List I (in Constitution of India) which is a residual entry. Thus, if a transaction is covered in list II, it cannot get covered in entry 97 of List I. Since sales tax is covered in list II, it is doubtful if service tax can be imposed on a transaction which is entirely getting covered under List II.” - V S Datey - Tax consultant.

Then - it's time that we take a stand as a IT Software Industry and decide not to pay Service tax on packaged software.

Quality of Service provided by the Service Providers

I remember hearing an episode from my Master about quality of work done by people from India. Many years back in the British newspapers Churchill’s remark about loose wires hanging on the wall attributed to 'some indian must have done the electrical wiring' had attracted furore from Indian elite of his time. But after narrating this episode my master said “Churchill’s observation was correct. How much True it is?.” He went on to explain that we never take 'pride' in what we do.

It is quite sad that even after lapse of 50-60 years situation is very much similar. Although India has emerged as a hub of 'call centre' for the world and MNCs like Dell and others outsource their work to India - looking at quality of services offered - I'm convinced that this boom also will die the death of 'dot-com' bubble. It may not be that fast or sudden but it is written on the wall. Companies giving this outsourcing work to India will realize soon that it's not worth the saving. They better have few people on the job giving quality service than to give it out to Indian who has no concept of what service is.

This comments many seem too harsh but you can prove to yourself that it's 100% true. Just try calling any private or MNC bank in India; or any telephone company for some help; or any good insurance company. I've personally tried taking help on simple issues from ICICI Bank, CitiBank, ICICI Prudential Insurance, SBI Credit Cards, SBI online banking, BPL Mobile for Blackberry Services, Dell for Sales and Technical support, Principal of the D J Sanghvi Engineering College in Mumbai and story is alarmingly same. If you don't bang your head and/or phone and feel like pulling your hair and start curing your decision to take help from this service providers.

Believe me, Indian Government is not justified in charging us 12% Service Tax on Services that you get in India. Service tax should be on 'real services' and not on the 'harassment' in the name of service. May I suggest that Government should call it 'Harassment Tax' because in the name of service we get only a harassment.

I've to really make a great effort in remembering any incidence where I would have got a prompt, simple and correct answer from the service provider. Not that such incidents have not happened ever but they too miniscule in number (say 0.5%) .

You may reason saying I may be too demanding and that's why I'm feeling what I'm feeling. But that's not true. In fact, I'm surprised by the wondering that if I'm - a well educated - tech savvy person is getting such shabby answers from call centre employees and their supervisors; what an ordinary person on the road must be experiencing and feeling?

How is the salary that call centre executives and supervisors and manager is justified? Have you ever managed to speak to a call center's manager? I've never managed it. A call centre supervisor has got 100 tricks to ensure that you give up. Of course, I'm sure usage of such tricks would definitely lead to ulcer and/or heart attack. But, that's what they are getting paid for.

I wonder, what could be the remedy? When would we Indians start taking pride in the work that we do? When will we become disciplined? Even highly educated people are not free from these problems.

I think, it’s time that we stop accepting this non-sense without any fight. Time has come to assert our rights. It’s only we don’t tell that we ‘deserve’ better treatment that we get such treatment. Time has come when we start revolting. If we don’t – no body will.

We should stop saying that ‘who has the time’ to do all this? Agreed, most of us do not have time or energy to put this additional fights but some one will have to. If we don’t help ourselves who will help us? It’s time that we wake up to the fact that Government is not going to do anything unless we demand it forcefully. Courts are not going to help us unless we have infinite time and resources (money). Courts have ceased to a ‘pillar’ of democracy. Media is busy serving interests of ‘rich and powerful’. Who is going to serve us? No one, except ourselves.

Start hitting back whenever you are shabbily treated. Pick-up pen to write letters. Pick-up courage to speak up - without any fear. Demand and you shall get. Knock and door will be opened – Jesus said. It’s time that we take responsibility for ourselves in our own hands and stop depending upon Government, Courts and Media.

Tell me what is a “Packaged Software” license?

Is it a purchase of “Goods”, “Service” or a “Royalty Payment"?

The idea of “duality” has deep roots not only in Indian Philosophy - where God is supposed be ‘dvaita’ as well as ‘advaita’; but such duality is in modern science also.

In Science, debate over the nature of ‘light’ and ‘matter’ is dating back to the 1600s, when various scientists proposed competing theories of ‘light’. It was through the work of Albert Einstein and many others that current scientific theory holds that all ‘particles’ also have a ‘wave’ nature. That is, 'light' has a dual nature i.e., it is a 'wave' as well as a 'particle'. When light hits a photosensitive material it generates electricity due to its particle nature.

Our Government – which seems to have no equal any where in any other country – have discovered another duality – in fact a new ‘tri-ality’ (for want to better expression let’s say this) about ‘Packaged Software’. It has found that “Packaged Software” is three different things depending upon how you look at it. If you look at it from the view of State level taxes - it’s a ‘goods’. If you look at it from Indirect Taxes point of view - it’s a “Service”. And if you look at it from Direct Taxes (Income Tax) point of view - it’s a “Royalty” payment made to the software developer.

You will say – so what? After all, in India we have more than 5500 laws and more than 100 taxes. We are paying so many taxes. And double taxation is not new.

Of course theoretically Double taxation should not be there and could be corrected. But, for that, once it is there, one need to make a writ petition in the High Court or Supreme Court OR approach some political party for the correction in the law/act. Another alternative is, if you are able to put-up with it, pay double tax. After all, it is not paid from the reseller's pocket. It's the customer who is paying then what’s the big issue?

Let’s look closely to understand this.

If you look at it from State’s point of view (for the purpose of “Value Added Tax” or “Sales Tax”) - Packaged Software License is a “goods” – without any doubt. There are number of court cases and it’s a well settled legal view that “Packaged Software” license is a “goods” and it attracts 4% VAT. It is fine up to this point.

But, if you look at it from the Centre’s point of view (for the purpose of “Service Tax”) Packaged Software License is a “Information Technology Service” (IT Service). Government woke up to this reality as late as in February 2008 and introduced a new service in the list of taxable services during the 2008 budget. With effect from 15-5-2008 all IT Services became taxable under Service tax net.

So, all companies involved in the business of selling Packaged Software Licenses started charging “Service tax” at 12.36% (inclusive of 3% Education Cess). And then to give its due to the 'State' – they are charging “Value Added Tax” at 4% on the total of License Fee and Service tax.

Everybody thought - that’s it. We can manage it i.e., customer will understand somehow that if ‘duality’ is there in ‘Religion’ and ‘Science’ - so it’s not difficult to accept that it could be there in Government taxes also. More or less, most of the customers came to accept the fact that they have to pay double tax - although it’s against the principal of double taxation.

Of course, we have heard that there are some software stalwarts like a large Software Company from Tata Group, which refuses to accept such dual nature of Software because they deal with Software licenses day-in day-out; and who would know it better? So, we understand that they have stopped purchasing Packaged Software products with double tax!! Of course, one may ask - how would they manage without purchasing any packaged software? Simple, they use open source software or they would develop it in-house. After all they have all the resources!!!

Any way, that’s besides the point. There is another twist to the story. In other words, plot thickens now. Don’t underline our Government's ability to create situations which would put even Hollywood film stories to shame!

Story goes like this – Software dealers started billing dual tax to customers in the routine manner (after fixing their Invoicing software, of course) – thinking that that’s it. But when they got payment for the packaged software licenses from the customer, they got a rude shock. They got cheque of only 89% of the Invoice amount from the Customer. Upon inquiry they found that customer had deducted 11.33% as TDS (Tax Deducted at Source aka Income tax) from the payment.

You would say ‘big deal’ - the dealers would pay that much tax less while making advance tax payment. Theoretically yes, but practically no. Why?

A typical software reseller makes about 2 to 4% gross margin on the sale of the packaged software license. So, he purchases it at say Rs.96, sells it a say Rs.100 – considering the best margin case. He bills it to customer at Rs.117 (100 + 12.36%ST +4%VAT). And customer pays him Rs.104 after deducting Rs.13 towards TDS. Reseller pays Rs.17 to Government towards Service tax and VAT – so reseller is left with Rs.87 in his hand. So, net – net he has lost Rs.9 per 96 i.e., he lost 9% from his cash flow. So, tell me after how many such transactions he would be left with no cash flow? You need to be ‘panchvi pass’ to answer this simple question.

Hey boss - don’t be ‘संतुष्ट’ (यार, SRK overtakes me sometimes) with 2 to 4% margin – ask customer to pay 9+4 i.e., 13% margin. Hey, that’s an unlucky number. OK let’s earn 15% gross margin. After all – reseller also needs to make money sometimes. Isn’t it? So, overnight price of Packaged Software license went northwards by 15%. Of course, this increase was over and above the 13% extra that customer shelled out towards Service tax and VAT on Service tax. So, in July 2008 all Packaged Software licenses became dearer by 28%.

End of story? नही यार. Plot thickens now. Some software distributors figured that if they paid 12% CVD (aka Customs Duty) while importing the Packaged Software license then suddenly “IT Software” turned from “Service” to “Goods”. So, when 12% CVD is paid - only 4% VAT would be payable; and no service tax! Wow, it meant that no TDS also. Great solution! After all, Indians are good at finding solutions. We are giving software solutions to the whole of USA and many countries in the world then why not for India. Isn’t it?

So far, before this happened, packaged software license was imported in to India by payment of ‘nil’ customs duty. Whether software was imported as a “paper license” or “software download from Internet” it did not matter. And this was more-or-less in line with GOI ‘s commitment to WTO in 1996 that by 1st June 2000 India will reduce customs duty to zero for 94 IT related items; and other IT items would have zero duty by 1st January 2005. Of course, one anomaly existed viz., if you imported packaged software license in a ‘shrink-wrap’ box then you paid 12% Customs duty. But considering the yearly volume and value of import under category - which is about 2 to 3% of the total packaged software license import – most people ignored this anomaly.

So, at least for some time – software resellers thought that by payment of 12% CVD problem of Service tax and TDS got resolved. But no, our Service tax people are smart. They are not going to give up that easily. Text of the law is in their favour. They have every right to ask each reseller to pay up “Service tax” because they have already tasted the ‘blood’ in this few months. So, software reseller community is keeping it’s fingers (and blood vessels therein) crossed. They are hoping against all hope that Service tax people will be content with revenue they have raked in so far in this 2 months.

But matter is not over yet. In January 2008 news stories had appeared in press that Microsoft was asked to make payment of about 700 to 800 Crore rupees towards Income tax. Also, in July 2008 a Supreme court judgment - in a case involving software imported by Airport Authority of India from a US supplier – it was held that Income-tax was payable by the US supplier in India because payment to them towards software license purchase by AAI was in the nature of ‘royalty’ payment. This was in spite of the wordings of the license agreement, which stated categorically that it was ‘a grant of license to use the software’. If one reads the Microsoft case judgement – it also seems to say the same thing i.e., payment received by Microsoft – although it was through a well-laid distribution network – was in fact an income towards ‘royalty’ payment; and not a ‘business profit’.

So, what does this view from “Income tax” mean to software resellers? It means that customers will keep deducting TDS from their invoices because customers are making payment towards royalty. So last I have heard is that all software resellers are queuing up outside the Income-Tax (TDS) department to apply for the Certificate under Section 197(1) (See Rule 28AA) relating to deduction of tax i.e., lower TDS.

Also, it was heard that price of all ‘downloaded’ software went upwards by another 10 to 20% depending upon from which country the software was procured. Why this? This is to pay the ‘withholding tax’ (aka Income Tax or TDS) to be paid to the Government towards income tax on the profit made by the non-resident supplier in India. This income tax on the profits made by the non-resident supplier seems to be payable by the ‘importer’. Of course, if the non-resident supplier agrees and if India has DTAA (Double Tax Avoidance Agreement) with that supplier’s country then importer may deduct TDS from the payment. But if importer is unlucky – which most likely the case – then importer will have to pay this tax from his own pocket.

Can it become more complex than this? We bet it can – but only in India. We still have our friendly politicians and bureaucrats who can make it still complex. They are capable of inventing ‘fourth’ nature of “Computer Software” licenses - apart from ‘goods’, ‘service’ and ‘royalty’!!!!

But those who are engaged in the business of software license reselling in India have got fad up of all this tax non-sense. Although they are merely 200 to 250 in number (all over India) they have got together and formed an association called "ISODA" - Indian Software Dealers Association. They have already initiated many steps to protect their interest. More on it can be found at http://www.isoda.in

p.s., one question is still unanswered. When a customer purchases ‘Computer Software License’ – how will this payment be classified as? Will it be a revenue expense, royality payment or a fee towards a professional service?

Don’t break your head. Just put this question in the next year’s Chartered Accountant’s (CA) exam. We have heard that only 2% candidates "pass" the final CA exam. But if this question is included in the exam then no one will pass next year’s CA exam. You bet.

Long live India and it’s harried citizens.

TDS Troubles (Woes) reselling Software Subscriptions

My company sells Computer Software from reputed vendors like Microsoft, Oracle, Symantec, Red Hat, IBM, Novell, Adobe, Computer Associates etc.

We are an authorised channel partner of Red Hat in India to resell their software products. Recently we sold a good number of Red Hat Enterprise Linux 1 year Subscriptions to a software company. Upon receipt of the payment, we noticed that it was short by about Rs.1,25,000/-. Inquiry revealed that TDS (Tax Deducted at Source)was deducted from the payment at the rate of 11.33%.

Upon inquiry with the cusotmer - we learnt that since it was a sale of 'Technical Service' hence as per prevailing Income tax laws TDS was deducted. But, we pointed out the customer that we were 'an authorised reseller' and not the Actual Service Provider i.e., Red Hat. Customer's argument was that while it's true (but) as per prevailing law they are obliged to deduct TDS from the supplier because there is no mechanism by which they can deduct TDS from the Actual Service Provider i.e,, Red Hat!

So, we thought for a while and came up with this idea that we should deduct TDS from our Supplier who is an authorised distributor for Red Hat in India. Upon disccussion - distributor (Supplier) agreed for the same. Here the 'logic' we had in mind was that like VAT - we would get credit for the TDS deducted by the customer.

But we soon learnt from our Chartered Accountant that we WILL NOT GET any credit for the TDS already deducted by the customer! What ever TDS that we deduct from our Supplier will have to entirely paid to Government promptly! So, our assumption of making TDS payment on our 'Gross Profit' by taking in to consideration TDS deducted by Customer - was wrong. In summary, it did not make sense to deduct TDS from our supplier and make the entire payment to the Government. So, we made full payment to our supplier without deducting any TDS.

What's lesson we learnt from this? Do not resell 'Software Subscription' or 'Software Maintenance' or 'Software Maintenance Renewal' because Indian Income tax laws do not have any provision for 'resell' of 'Technical Service'!

We talked with Red Hat people about this. They could understand our difficulty and promised to look in to the matter and get back to us with a solution. And we are waiting.

We talked to our Chartered Accountant to take up this issue through their 'Association'. They said nothing can be done by their association; as Finance Minister or Income Tax Department does not ask their opinion or listen to them. Only way this can be done is by making representation to Income Tax department by the 'Association of Software Resellers'. What is it called - lobbying - I suppose. And we do not have any association of 'Computer Software Resellers' in India. Bad luck!

So, who will do the representation to the Income Tax department and ensure that suitable amendments are done to the Income Tax laws which makes provision for 'Input Credit' similar to VAT and Central Excise laws? I do not know.

OK that's that. But the funny part comes now. Keep reading...

1. Red Hat's competitor Novell is selling it's Suse Linux Enterprise Server not as a 'Subscription' but as a 'Software Product'. They are charging 4% VAT; and Red Hat charges 12.36% Service tax. So, what's moral of the story? It's obvious.

Note added on 30-10-2007: Not really. Recently when we sold Suse Linux Enterprise Server with 1 year subscription to one customer they deducted TDS while making payment to us! So, what have we learnt? Pray to God! God please save India from it's complex tax laws.

2. One of our old-time and good customer - who are a big time Software House - started deducting TDS on the sale of Software license. Just in case, if you do not know - Software license is treated as a "Product" and it attracts 4% VAT. It is NEVER considered as a 'Technical Service', hence it does not attract Service Tax. So, there should not be any TDS deduction on the sale/resell of Software license.

Upon inquiry we learnt that their 'Consultant' had opined that 'License Fees' charged towards sell of Computer Software is liable to attract TDS due to a new provision in the Income tax laws. So I decided to read this provision. Upon reading I learnt that it was all about applicability of TDS on the payment of 'Royalty' paid on usage of Scientific invention etc.! It said that TDS is to be deducted whenever "Royalty" is paid because of an "License granted" by the Inventor. Reading of full text makes it amply clear that it's all about 'Royalty' payments only.

So, how did the 'Consultant' came to this conclusion that sell of Software license attracts TDS? Oh, it was the presence of the single word 'License' that was the culprit. I reasoned to the customer that usage of word 'license' was in relation of 'royalty' payment and not in relation to 'usage of computer software' or 'grant of software license'. But Consultant's opinion was that - due to 'Stringent Penalty' for non-compliance of Income tax laws - customer was advised to be on safer side and deduct TDS!

So, what's the end result?

1. In first 5 months of the current year -we have paid more TDS than our entire year's Income tax liability. So, at the year end we will be asking for Income tax refund. Do I have to mention - how easy or difficult it is to get the refund the from Income tax department?

2. We have decided not to allow any more TDS to be deducted from the receivables. How do we do it?

We will have to apply to the Service tax department of the Income tax for a certificate which will allow either "no TDS" or "TDS at a lower rate (which is decided by the Income tax officer)" - up to the financial year end or for ever (left again to the discretion of the Income tax officer).

I learnt from my Chartered Accountant that getting this certificate is neither easy not cheap. It would cost us Rs.10,000/- or more. And of course, it will take many trips to the Income tax department and lot of time to get it - if at all.

Update on 30-10-2007: We made an application. Our CA was told upfront that it would get rejected. Why? Because we had paid self-assessment tax in the previous 3 years! Isn't it normal thing to do? What a logic!!

Well, what about 'merit' of the case? Well we can file an appeal to them when it's rejected! About 15 days back we got the rejection letter. What next? File an appeal - what else?

Update on 1-4-2008: No I'm not making April Fool. We got the Certificate of lower deduction from Income tax under section 197(1) at 1.4% on 15-3-2008. We got it after lot of arguments, loads of papers and paper projections and lot of sweat. What's validity? It's valid up to 31-3-2008. We could not use it because we could not find an existing customer in this 15 days - who was going to deduct TDS in this 15 days. Sad!

Update on 9-8-2008: We applied for the same certificate once again in April 2008 with similar load of papers. We got it on 12-5-2008. This time it was for TDS at 1.5%. It's useful.

Another case: We had sold Software Maintenance to a large Bank. Payment came with 4.25% deduction. When TDS certificate came after lapse of 15 months we realised that certificate was for only 2% amount. What about balance 2.25% deduction? Upon inquiry we learnt that it was towards WCT (Works Contract Tax). Well, we told cusotmer that WCT is not applicable on Software Maintenance. They said nothing can be done now (after 18 months) because it is already deducted and paid to the government. What about the certificate? We will get it. What do we do with it? We are thinking of framing it in a nice photoframe and write 'thanks to tax laws in India' this certificate worth more than Rs.30,000 is hanging on our wall.

That's life in India.

Any comments or suggestions?