Should any company has to disclose its financial activity to any outsourcing Company (INDIA)????
The court of law in India has ruled that any company having its financial activity overseas should disclose their activities to outsourced company. It’s an effort to ensure that there is no evasion from such a companies in complying with tax on its profits. The ruling came into fruition after hearing the case of M/s Apollo Tyres Ltd where it was found that by establishing manufacturing and selling arms for higher profit margin abroad, there was a perverse strategy to avoid the taxes in India. The Tax department had conducted a survey in the company and upon finding no proper documentation, a case under tax evasion was made out.
The order of the Bombay High Court was given on 8 October 2014, where it has said to M/S Apollo Tyres that since the all their manufacturing is outsourced to the overseas, it must disclose all the financial activities to M/s Gupta Consultants which is an outsourcing company.
M/s Apollo Tyres Ltd have tried to plead that they have disclosed their financial activity to Gupta Consultants which they did not receive any profit from them. However, this did not hold water as this was done later on. The bench of justice Yatin Oza and justice Vidyadhar Padmar pointed out that there are financial documents which M/s Apollo Tyres Ltd produced before the court. The bench further said that they did not believe these documents and they have to disclose their activities to outsourcing company in future.
This case will have implications on many other companies who are outsourcing their activities overseas, either part way or all the way. It’s a good example of how Indian judiciary is trying to make sure that tax evasion does not take place in India. The case is presently dragging out for the appeals by both M/s Apollo Tyres Ltd and M/s Gupta Consultants has been revoked by the Delhi High Court.
There are many other companies who have outsourced their activities to countries like Singapore, Hong Kong, and Dubai. This kind of activity is prevalent in the IT industry where companies from America, Europe, and Asia typically outsource work to smaller countries which provide cheaper labour and it is also felt that the quality of work is better too.
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The above article was published in "The Financial Express" on 19 March 2015 (India). It is about how SC clarified about the financial activities of outsourcing company for a foreign subsidiary Company.
What to do in an outsourcing relationship? - http://www.ceosia.com/what-to-do-when-outsourcing/
Outsourcing & FDI - http://www.ceosia.com/blog/cfo-how-outsourcing-and-fdi
Outsourcing, Outsourcing and more Outsourcing! - http://www.ceosia.com/blog/cfo-how-outsourcing
(3) Yield management in outsourcing relationships (aka Using the money you don't want to keep)
The above article was published in "The Financial Express" on 12 October 2014 (India). It is a very famous article where the author states how he has implemented using the money you do not want to keep by out sourcing certain process.
ARTICLE START
I had a mostly silent seat with my friends as we waited for the movie to start. The door opened and an employee walked in and whispered something to us. Our faces didn't show any reaction, just shook our heads. He left and we continued with our conversation. I was so engrossed in this conversation that I didn't pay any attention to the opening scene of the film which was depicting some kids playing cricket on the road or somebody grabbing a flower from a garden etc., and then suddenly...BANG! somebody stole the mobile of a neighbour's child who was playing outside her house nearby, after which the child started crying and his mother also started crying.
This was followed by a dialog sound where some old man said that there is no point in complaining to police because these days everyone has become a kleptomaniac. A friend sitting next to me started laughing at the dialog, and I too smiled after understanding what the film is trying to convey. It's a model of life these days where people have forgotten that they have become kleptomaniacs after using their talents for earning money. They use their talents and intelligence to earn money and then they do everything to save it without spending on anything. In this way, the society is getting corrupted day by day. Whatever we are seeing these days is all because of the culture of saving money.
For example, if we want to build a house for our family for our children's future, we say that it will take much time and labour so let us construct a temporary house which can be changed as per the current need. If there are any repairs to our car, we say it is not worth repairing because there is no guarantee that it will last for the next 5 years. If we want to do some big construction of a building but are not sure if we have enough money then we say it would be better to do small scale construction and in phases. All these things happen because of the culture of saving money which makes us forget the overall goal and just focus on acting smartly without ever getting results.
Then what is the solution? I think this is a question that many people are thinking about these days as they see day by day practise. There is a difference between earning money and spending money as in the case of lending money. What we have done in the past is earning money and now we are spending it on things. This slow process of saving is being followed by everybody these days because they want to reach their pension age without delays, without any problems and without any difficulty.
So what should be done now? I would say that first we must come out of this culture where we are always looking to save money and if there is something that needs to be done at the expense of wasting some extra expenses then give Top priority for this, even if it takes more time or work. I would recommend that people save a part of money and invest in a few, but important projects as they are the one that could bring good returns in the future. Instead, if we spend everything on some unnecessary things then all our hard efforts after saving money will go waste.
The other thing is that we must know what is the purpose of saving money. It's a basic question to ask oneself and it should be the first and most important question that is answered before doing anything. The answer to this question should be: How can I use my money to help others? I would like to give you an example of such an answer.
Conclusion
- http://www.ceosia.com/blog/health/what-is-the-purpose-of-saving/
(4) Productivity vs Value: Why are we being so generous? - http://www.ceosia.com/blog/practice/productivity-vs-value
(5) Five Reasons Why You Are Not Surprised When You Hear About Corporate Fraud - http://www.ceosia.com/blog/how_to_recover_fraud
(6) The Predatory Business Model (The Free Market Comes to Work!) - http://www.ceosia.