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The harsh facts of the Swiss story

Akhilesh Bhargava

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While government’s insincere and half-hearted attempts to unveil the information from Switzerland has gone futile for obvious reasons, why is it that this all underwent a sea change in the year 2007? Mr. Akhilesh Bhargava, Business Editor of HW Business and Finance shares his insights on the matter in the video.

Business Tit-Bits

The bogus turnover business

Akhilesh Bhargava

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The hawala operators had a business turnover consisted of giving bogus bills of purchase and sale, for almost any item and of almost any company too. These fake bills helped companies not just to show a rosy picture of performance, but to also evade taxes, by booking bogus expenses. In this episode of Business Tit-Bits, our Business Editor Akhilesh Bhargava discusses how implementation of GST led to crackdown on this bogus turnover.

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Rupee rises 67 paise against US dollar on falling crude prices

Anil Rajpurohit

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Mumbai | The rupee appreciated 67 paise to 72 against the US dollar at the interbank foreign exchange Wednesday after crude prices fell to a one-year low in the global market, easing concerns over expanding current account deficit and inflation.

The rise in the rupee was also supported by dollar-selling by exporters and banks and the US unit’s weakness against some currencies overseas, traders said.

Furthermore, a higher opening in the domestic equity market too supported the rupee.

Brent crude, the international benchmark, dropped almost 7 per cent to a one-year low of USD 65 a barrel after the US President Donald Trump urged Organization of the Petroleum Exporting Countries (OPEC) and Saudi Arabia to maintain their current policy of gradually increasing output, which helps to cap oil prices.

At the interbank forex market, the rupee commenced with strength at 72.18 and appreciated further to quote 67 paise higher at 72 against the US dollar.

The rupee had gained 22 paise to close at 72.67 against the US dollar Tuesday.

Foreign institutional investors (FIIs) had sold shares worth Rs 494.95 crore Tuesday, as per provisional data.

Meanwhile, the benchmark BSE Sensex rose 156.56 points, 0.45 per cent, to 35,301.05 in early trade.

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Business Tit-Bits

THE BOGUS TURNOVER BUSINESS

Akhilesh Bhargava

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business

It was about a decade ago, when a big havala dealer was raided by the sales tax and income tax authorities in Mumbai. He ran his shady operations from a small room, situated in a ‘galli’, in the old congested markets of Kalbadevi, Mumbai. From this one room office, furnished with a table and chair, he conducted turnover of thousands of crores. His so called business turnover consisted of giving bogus bills of purchase and sale, for almost any item and of almost any company too. He issued such bogus bills, received payment by cheque, which with the connivance of bankers he refunded back in cash, after deducting his commission of 3%. His fake turnover involved bogus sales and purchase of matching amount, resulting in no profit to him on paper, which was a fact, since his real income was the mere 3% commission that he charged. But he is said to have issued bills of over Rs.10000 crores (of popular items like cement, steel and metal products), giving him an income of Rs.300 crores, in this manner.

These fake bills helped companies not just to show a rosy picture of performance, but to also evade taxes, by booking bogus expenses. These bogus bills were at the root of the window dressing and the rampant manipulation of books of account by corporate India and both big listed companies, as well as small enterprises a were involved in this racket. Due to such a rosy performance that these corporates showed, with the help of these bogus bills, they not just became eligible for higher bank loans, many of which have gone bad, but they also hoodwinked investors on the stock markets, through higher share prices of their manipulated scrips. In order to avoid paying income tax, these corporates who took bogus sale bills, also took a matching amount of purchase invoices, such that there was no profit on their books of account.

This was a pan India practice and each commercial centre in India, whether it be Mumbai, Delhi, Kolkata, Ahmedabad, Indore etc. was found to have such racketeers, who were issuing such bogus bills for a paltry commission, but that helped huge tax evasion. These racketeers of hawala bills, chose to operate below the radar, by not paying direct or indirect taxes and not filing any tax returns, and were difficult to detect.

With the onset of the GST and the collection/integration of extensive data by the Income Tax Department and its real time analysis, the earlier flourishing business of these hawala men, has come to a grinding halt. All those who had taken such bogus bills were also raided/penalised/prosecuted by the tax authorities, thus killing the market for such illegal activities. While this action has ensured better tax compliance, it has also ensured that corporate financial statements are cleaner and more genuine. It is no longer easy for a corporate, to show a rosy picture of performance, on the basis of bogus bills. More than the stringent action by the tax sleuths, it has been the advent of technology that has helped to spot these racketeers and destroy their business.

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