Fraud path of Paytm

VIJAY Shekhar Sharma calls himself a capitalist, hippy and founder. In five years' time he now boasts of a billion dollar company in Paytm. He did not lay any brick or mortar in his climb up the ladder. He sold one website to launch another, and there he's now dipping his hands into the pockets of Jack Ma of Alibaba to become more fatter. 

Sharma comes from the city of dust and oriental learning for minority community. But Aligarh never made names internationally for either its insatiable hunger for dust or for the Muslim University, which came up with liberal British support, who in return for the favour insured "The Raj" with divide and rule policy. Aligarh made names nationally and internationally for its copyright on "Jugaad" technology.

That Jugaad is now internationally accepted as a word to describe the habit of finding a solution through whatever means speaks volume for the achievement of Aligarh. Thus, the city not only bathes each moment in swirling dust, but also sprays herself with smoke emitted by generator sets mounted on wooden carts, which outnumber the manufactured four-wheelers there.

SHARMA did not bring any innovation in his path which led him to the billionaire club. He aped what the Americans did decades back. True to all capitalist economy and consumerist society, greed comes out as surest source of success of any business. Aligarh knows the value of greed better than any other city, and so it throws all norms to the winds to get to the ends. Sharma truly belongs to Aligarh. And, thus, he made greed of the people his business model. 

Business grew and data expanded. Customers flocked for cash back offers. No technological innovation was required to become big, as telling it aloud that the App or Paytm website pays back was enough to broaden the customer base. The likes of Ratan Tata and Jack Ma of Alibaba too poured their monies to make more money by tapping the business of greed.       

The Paytm is essentially a wallet. But the greed of Sharma to become a big player took him to the path of cheating the customers. Sounds wired that a new age entrepreneur with funding by venture capitalists like Ratan Tata and Jack Ma could be essentially a crooked fellow who is out there to make quick bucks at the expanse of customers! It would not sound so, with an illustration.

YOU visit Paytm and opts for a recharge of pre-paid mobile. You pay Rs 515, the Paytm says there will be full talk-time along with extra time. But your mobile phone is actually given a talk time of Rs 1. What happened to Rs 514?

The search for this answer is through a 48-hour long ordeal. The Paytm would say, deal with the

Airtel. "We are only a payment gateway," says Rishi of the Paytm.

He's technically right, that Paytm has an RBI license as a wallet in the form of a payment gateway. But take a look at the Paytm portal. It operates and functions as an e-commerce marketplace and has an ecosystem on the lines of Flipkart and Amazaon where it allows sellers to sell their products. And, thus, it's not just a payment gateway. So, Rishi lied actually, but he's doing a job in a firm where lying appears to be a culture.

Rishi and all his associates at Paytm would so say, "go and settle it with Airtel". So, Paytm essentially is an e-commerce marketplace where it takes no accountability for false promises and failure to deliver the promised services. Thus, deception looks well-knit and camouflaged.

But, yes, what happened to Rs 514?

The answer is not yet forthcoming, and now the time has come to drag Sharma. "I really feel terrible the way one of our team member (s) took judgment on the issue," said Sharma when he was confronted. 

Then he informs that the Rs 515 paid to Paytm gave an international roaming facility to a mobile

phone which is being used in Godda and Jharkhand. The user has no plan to go abroad, and the recharge was not done for such a purpose. So, the Paytm has an extraordinary ability to give an international roaming facility when talk-time recharge is sought. He also asks the customer to talk to the cellular operator.

Thus, Sharma, who is chief executive officer (CEO) of the Paytm, is in a business where he is not accountable for false promises, cheating, deception, and fraud, but would pass on the onus to an organization whose doors the customers never knocked. Is there any better business in the world than this?

Yet, when confronted, Sharma asks for solution from the aggrieved customer asking how should the process be developed that the customers are not cheated. Thus, he admitted that the Paytm process is flawed. And, yet, the likes of Ratan Tata and Jack Ma are investing in a flawed firm.

Frogs sometimes jump off well, and think that they can own the ocean too. The internet entrepreneurs are such frogs who're taking too many customers for a ride with impunity.

A thug state

"I find the prohibitionist a negative person. To ban drinking has as much chance of success as an attempt to ban sex. One unfortunate outcome of prohibitionism anywhere in the world is that it promotes hypocrisy as well as disrespect for the law," wrote Cedric Day, a British bureaucrat, who worked in India in 1960s.

In Cedric Day's descriptions, Nitish Kumar and Arvind Kejriwal should be outright negative persons. But, yet, Kumar can well take refuge in the fact that a large number of women for years had been pleading him for curbs on drunken ruffians in the state. 

No such alibi exists for Kejriwal. That a few elites began loud-talks of toxic Delhi air was reason enough for him to latch on an opportunity to host another event, and engage people on a large scale in a mass hysteria. The darling of television sensed that an event affecting most of the people in Delhi would draw curtain on his fulsome failure on all the grand promises he made to grab power. And, thus, Delhi is hosting the spectacle of the second phase of "Odd and Even scheme" for four-wheeled vehicles.

MITHILESH Kumar (name changed), who stays in Vasundhara area of Ghaziabad,

works in Delhi, and has no option but to commute in his car. The nearest Metro from his home is about seven km away, and no convenient mode to complete this last mile connectivity is there, which explains his bond with the car. 

But the first day of the second phase of "Odd and Even" scheme made his "even" car ineligible to hit the roads. So, he called an Ola cab, and an SMS buzzed his cell phone.

"...3 times peak time charge is applicable on this booking...," read the Ola message. In a hurry, he did not read the message, and rode the cab to his office. But the driver's demand and simultaneous Ola message asking him to hand over Rs 994 left him gaping. And, then he read the first message.

Yet, he did not understand "3 times of the peak charges". The driver cleared his head. "Since there is a massive demand and supply mismatch for cabs due to "Odd and Even" scheme, the formula is arrived at of three times more than peak charges. It could be much higher if demand is more...," he expounded the formula. 

Mithilesh Kumar's car stayed at home, but he rode a four-wheeled vehicle only, and was fleeced three times more money than he normally would have paid. The "Odd and Even" scheme looted him. Yet, Delhi did not see less number of cars on his account. 

Incidentally, he has paid road tax for 15 years in advance. But Kejriwal has not yet said a word if the road tax would be returned, since freedom to ply on roads has been curbed. Kejriwal, in fact, has not yet answered allegations levelled against him and his government in the purported sting operation where palms were greased with crisp papers embossed with Gandhi's image and singed by RBI Governor for distributing CNG stickers (exempt from "Odd and Even").

ASHOK Kumar Walia is a bachelor and a doctor by profession. He had been Minister for PWD, Health, and Urban Development during the 15 long years of the Sheila Dikshit government in Delhi. 

Once he went to Tokyo. There he saw flyovers dotting the city all around. He came back, and told his officials that Delhi needed flyovers. The road congestion was so long and painful, that most of the motorists would be stuck at traffic signals for 15 to 20 minutes. Walia began building flyovers. The Supreme Court in the meantime mandated migration of public transport to the CNG mode. Delhi became better and cleaner.

Walia went to Tokyo again after a gap of about a decade. He saw flyovers over flyovers. He enquired from his hosts, "why do you need flyovers over flyovers?".

"The original flyovers were choking due to rise in vehicular population, and, hence, new flyovers over them were needed," quipped the Japanese host.

The Delhi minister came back and told his officials the need for flyovers over flyovers. An elevated ring road over the existing ring road was planned. 

But Walia and Sheila Dikshit by then had become unwanted in a city where the Gandhian activist Anna Hazare and motley of television channels glibly allowed Arvind Kejriwal to become an answer to all the ills afflicting Delhi.   

The elite camp-follower of Kejriwal glibly argue that many western countries have also tried such a formula to curb pollution. But no such people has yet stopped using four-wheeled vehicles to commute to their work places themselves. 

That Delhi has a remarkable elasticity to dip in their pockets to buy a second car is a fact not worth repeating. Such a plan failed miserably in Mexico. And, Delhi is more closer to Mexico than London surely is lost out to the logical minds of the camp-followers of Kejriwal.

A tourist from Madhya Pradesh was arguably the first person to be challaned on the commencement of the second phase of "Odd and Even" scheme. He told the cops that he had not known of such a thing since he had been driving for a couple of days. But he had to part with Rs 2,000. 

HE may have rightly thought that sometimes the state is a thug, and encourages people to become a bigger thug.

Lost to chatters of Gymkhana club

What if oil prices had not crashed by about 80 per cent from its peak? 

In a few hours, India will know finer details of the third General Budget of the Narendra Modi government. Indian economy is huffing and puffing to stay just a little above seven per cent mark. 

A year of collective shock to Modi's economic incrementalism called creative by some has passed by. Admirers of Modi exude sense of resignations. His foes betray exultation. People at large give a sense of disbelief, and seek refuge in collective silence.

A government sitting on a bounty of over Rs 1.50 lakh crore of oil windfall has mostly been on expenditure freeze. The fiscal deficit is well within target. But all other targets set in the Budget for 2015-16 coming close to the timeline suggest authorship of some drunken economic lunatic. Direct tax collection is off target by 10 per cent, and suddenly woken up tax men are doing some crazy things to make nightmarish reality little less acerbic.

Indian economy had a joy ride for a bout a decade from 1999-2008. The Gross Domestic Product (GDP) flew past magical eight percentage points. But the journey 2009 onward has been down the hill.

The decade long golden run of Indian economy was arguably not fueled by great software export or manufacturing expansion. It was a golden gift of the weather God. The Monsoon had been steady. The government incentive to produce foodgrains enabled farmers to sweat to sweet income. The farmers had money in their pockets to go out and buy. Additionally, the government splurged on rural income, pouring at least Rs five lakh crore by way of National Rural Employment Guarantee Scheme (NREGS) and its various earlier avatars and Pradhan Mantri Gram sadak Yojna (PMGSY) in that golden decade. 

Afterward, the government got wiser, knowing that its rural splurge was past the line to give political dividend anymore. And, the powerful stream suddenly turned into trickle. 

The weather God too got angrier. The Monsoon rains turned wobbly. The spread was not even. The year 2008 brought a pause to the golden agrarian run. Many parts of the country came under the spell of drought. And since then the drought areas had only been geographically shifting, while some like the Bundelkhand, Marathwada, Vidarbha, parts of Karnatka and Gujarat staying under long spell of dry weather. 

The parched land dried rural splurge stream battered the Indian economy by 2013. The GDP growth kissed five per cent. The Modi government's first year saw a major sub-normal Monsoon. A year later, his government watched clueless to the blow of the unseasonal rains and hailstorm. Another year later, the Monsoon left large parts of the country parched. 

And Modi never believed in rural splurge. But the economy crawled back to seven plus mark, but the Manmohan Singh's time of jobless growth stayed with Modi too. 

With jobs not in sight and rural income gone, the facade of India's robust economy has been exposed to all. 

The governments without exception have been fascinated with those flashing degrees from Harward University and its likes. Such tribe penetrates the government echelon with ease. Those who had never seen a village in their lives manned the Ministry of Rural Development not long ago. Those who are enamoured with American economic flamboyance had been eyes and ears of P Chidambaram. With the change of the government, the tribe has not gone away, but only changed their robes.

Arun Jaitely had apparently lobbied hard to get into Ministry of Finance when Atal Bihar Vajpayee was Prime Minister. All lawyers turned politicians dream of becoming Finance Minister. But Vajpayee had a good measure of caliber of all around him. And, Jaitely was not allowed anywhere near North Block. 

India's irony is such a man is now Finance Minister who to his credit has not a single idea original to him which could inspire an awe. Millions of people in the country are now awe-struck to the poverty of ideas of the North Block.               

If oil had not crashed by about 80 per cent from its peak, India would have seen Modi government as UPA-III in much worse form. Difference is arguably just of an accidental gain from outside.

Indian economy is sadly slave to chatters of the Gymkhana club. And, only idlers go to a club.

Debt funds: How dividend is taxed

Mutual funds carry wide basket to fulfill diverse needs of investors. While equity oriented funds come with promises of high growth, they carry risk in the proportionate manner as well. The debt funds offer predictable returns with investors not needing to lose their peace of mind in times of volatility. 

Yet, taxation in the case of debt funds is largely least understood. 

Dividend distribution is the key attraction of most of the funds and a possible way 

for wealth creation. The investors do not need to run after their charter accountants to figure out their tax liability at least on dividends received. The reason is simple that there is no tax on dividend received by an investor. But investors at the same time should not ignore the taxation on dividend on debt funds for the simple reason that may affect their anticipated returns on the funds.

Even while a unit holder is exempt from tax on dividends received, the fund house has to pay a dividend distribution tax (DDT) before distributing this income to its investors. So, DDT is deducted by the asset management company prior to disbursal of dividends. The DDT is applied at the rate of 25 per cent, which in the past was 15 per cent. In addition there is a 10 per cent surcharge along with an education cess of three per cent. 

Thus, the effective DDT comes at 28.33 per cent. And, since the fund house deducts the amount from the corpus, the net asset value of the fund correspondingly comes down. And, therefore, an investor should be concerned enough to know whether he has taken the right decision to invest in a debt fund or not, and if yes, then should also know how long he should stay invested to make the best out of the fund.  

What are debt funds?

Simply put, the non-equity funds qualify as debt funds for the purpose of taxation, which will include all types of debt funds, international funds, monthly income plans (MIPs), and Gold ETFs.

An investor would serve his interests better by knowing the full implications of taxes on debt mutual fund before taking the decision to put the hard earned money in a fund.

Besides, the dividend distribution tax paid by the fund house, an investor would incur short-term capital gains if the holding period is less than three years. As per the taxation rules, short-term capital gains would be added to the income and taxed as per the individual's income tax slab. And, thus, the consensus among the fund managers is that debt funds would not be superior to other options of fixed deposits in banks if the holding period is less than three years. The tax slab as is known is nil tax for income up to two lakh, 10 per cent for income between Rs 200,001 to Rs 5,00,00, 20 per cent for income between Rs 5,00,001 to Rs 10,00,000, and 30 per cent for income above Rs 10 lakh.  

In case, the holding period is of three years, the investor will incur long-term capital gains, which come with flat 20 per cent but with indexation. Indexation is the process which adjusts inflation from the time an investor gets into the fund till the exit. This process allows an investor to inflate the purchase price of the mutual fund units to take into account the impact of inflation. This gives an investor the benefit of lowering tax liability.

The government in 2013 had introduced rebates as well, which is of Rs 2,000 for total income upto Rs 5,00,000. In addition, those who are above 60 years of age but below 80 years, the basic exemption is Rs 2,50,000, which in the case of those who are above 80 years of age is Rs 5,00,000.

Besides, three per cent education cess is applicable across all tax slabs. Also, a 10 per cent surcharge is applicable on income exceeding Rs 1 crore. 

Growth or Dividend?

In fact, an aware investor needs to make the prudent choice to understand the tax implications before choosing a fund, and he should seek to know whether he should go for a fund with the option of dividend or growth. It may be borne in the mind that a realistic assessment can only be made by factoring in the returns of the fund post taxes, and should stay away from the lure of pre-tax return picture often shown to a prospective buyer of a mutual fund product.

Needless to say no dividend is given in a fund plan which is growth oriented. The

fund managers are of the opinion that growth funds are best suited for those who are keen for long term investment. It naturally gives the benefit of compounded growth to an investor. Also, all income under a growth fund would attract only long term capital gains if held for three years or more. This, off course, is in contrast to dividend option, which is suited to serve the needs of the regular income of the investors. But it must not be taken for granted that the dividends would necessarily be paid out, as it all depends on the fund. 

In addition fund houses also offer the option of dividend re-investment in which case dividends would not be paid out be reinvested in the scheme and the investor gets additional units of the scheme. But it has to clear that the new units would be treated as new investment and would invite the normal lock-in restriction as laid out by the fund houses and also for the taxation purposes. The fund houses may also impose entry and exit loads if the new units are sold within the lock-in restriction. 

And, thus, an investor has a choice to choose between a growth fund or a dividend re-investment fund if he is not comfortable with DDT eating away the gains from the dividend pay out options.