Train ko saaf rakho.

I am visiting Warangal this weekend. Will spend a few days with family and return on the morning of 4th.

Public transport in India is very evolved, and is probably the most affordable mode of transport the world over. It may not have a lot of fancy bells and whistles, but it does the job. I left Bangalore by volvo at around 8:00 PM Friday and got to Hyderabad at around 9:00 AM. Jyostna and I travelled from Hyderabad to Warangal by the satavahanam. I and Jyostna boarded the train at 3:30. We had reservations; our seats were 136 (aisle) and 137 (middle). Josu sat at the aisle seat, I adjusted myself in the center, and then there was one Mr Raju, a person in his late 40s at the window.

There were these kids with their mom and an elderly person who could have been their grandfather, or someone similar. There was an entourage of 3-4 men in their early 30s to 40s accompanying this family. There was a very stylish dude in the entourage wearing a body hugging off-white tee with “57” written in “chocolate brown color cloth”, and “USA” on the back. Tight jeans, large dark glasses that were desperately trying to go from the 70s to the 80s. He was talking about the “East Coast” like he owned the place. They bought ice-cream. The vendor asked “How many”. Stylebhai says, “enni vunnayi, ivvu boss, andariki”. Vendor obliges; stylebhai takes each cup, opens the lid, puts a spoon in it, and gives one to each family member. The last family member refuses icecream. “ido, ii ice-cream vaddu”. Vendor: “Open chesaaru kada sir”. Stylebhai uses harsh language, cribs a lot about the icecream not being good etc, but it kinda fizzles out and he pays up. The youngest kid collects the empty cups from them and throws it out of the window. The train left promptly at 4:15, the right time.

I and Jyostna contemplate over events of the past few minutes. I lean over to the kid and tell him in the most calm and nice way “child, you threw those cups out of the door. It is not the right thing to do, we should not make our trains dirty, railways has provided a dustbin; we should throw it there”. Many passengers around us heard me, the mother chideed the kid. A few minutes later Josu and I start eating an orange. We peel it into a plastic cover. This young couple in front of us order coffee. Coffee done, the dude is throwing the cup into the usual place – the train window. I catch his hand, take the cup from him, put it in our plastic cover. “That is OK, if it is not easy for you, I will throw it in the dustbin”. The dude is totally embarrased, takes the cup back from us and does the obvious. Unfortunately, I have to do the same thing again to one another individual who just finished eating his dinner, had dumped his food tray on the tracks, and was ready to throw a paper out. He has an explanation: “It is only a small piece of paper”; his age: probably 45-50.

Mr. Raju then got up, he just had a coffee. He crossed all of us, went to the dust bin, and came back. The uncle who was with the kids dropped a banana peel on the floor. He lifted it with care, and the kids used the dust bin. I do not know if they will continue to be clean in their other journeys.

Anal about tax.

There is a larger context to why I am being so anal about this tax business. This is not about tax; this is about finding the right way to do things in the country. The act of not paying tax has large scale implications. One must not evade tax without thinking about those implications.

We should pro-actively understand the law, even if we do not follow it. My larger goal is to identify what is wrong; why is it that people find our Govt. to be expensive. Maybe roads or pipelines should not be made by Govt., people should do it directly themselves. Look into Freedom Team of India (FTI) for some more thoughts on policy issues.

Apartment – not done yet.

Yesterday two landlords had assured me that they are OK with giving out PAN numbers and sticking to white money. They spoke too soon, and after some “consultations” gave me several options today:

1. Pay some of the rent towards the flat itself, and rest of the money could be for furnishings, fittings etc.
   This is clearly illegal; tax law says that furnishings etc are part of “Rent” and cannot be separated from taxable component. I have web-links to prove this. I will do no such thing, and I am sure HP will not agree to this. My answer to most landlords about this is that they should speak directly with HP about it.
2. Give us a check for the 16.99% tax that HP will deduct at source.
   I wonder why the tenant should be responsible for tax that the landlord is required to pay by law. My company cuts my salary at source. How would it look if I ask the company to pay a part of my income tax? Thankfully, reasonable people have not suggested this, and when others said that, I simply smiled and kept quite.
   A point to be noted here though; sales tax at shops is passed onto customers. In legal terms however, it appears that rent is considered as income earned by the landlord, and a tenant is not liable for tax. Also, HRA is not completely tax free.
3. Can HP ignore the part of cutting TDS; we will do our own taxes?
   From my understanding, it is a mandatory requirement that TDS should be performed in a CLA. Maybe there is a clause out there that will let you get around TDS. If that is legal, let me know.
4. Do a direct person to person lease without involving the company.
   First, I have too many financial commitments coming up due to which I cannot spare the money for security deposit. Second, I can borrow from savings, family, friends, and HP will also give me an interest-free loan. Third, I will not use the second option mainly because you would use the person to person lease to avoid tax. I am more determined to insist on a CLA now. If it is of any solace to the numerous landlords out there, I also pay more tax if I go through company lease.
5. Why dont you pay Rs 10,000 as the white rent, and Rs 5,000 in cash. After going through points 1 through 4, I do not think a reasoning needs to be given against 5.

Most landlords have classic lines: “The system is like this only son. The Govt. has done little for us, they waste our money. You are thinking from a US perspective. We are already being assessed for Income Tax.” But people often fail to realize that tax evasion has huge cost implications. Let us consider a locality that has 200 rental premises. Further, if each one of them is priced at rents of Rs 15,000 and none of them pay tax, they evade about 2.5 K per month, or in conservative terms 20K per landlord per annum. This translates to about 40 lakh per annum in one locality. If one takes an estimate for 10 years, at a reasonable 3% simple interest rate, not counting inflation, the figure is nearly around 700 lakhs. Now let me ask; does it cost 700 lakhs to maintain roads, pipelines, electric network for 200 homes over 10 years. Even if we get conservative and take one-thrid of the cost (~250 lakhs), it still is a lot of tax evaded for 10 years. And even then it does not cost 250 lakhs to maintain a place that has 200 homes. Honestly, when landlords evade tax, they lose a lot in the long term.

You may think that the tax is not justified given the facilities provided. But I ask each landlord out there – It has been maybe 5-6 years since you are renting your property. For how may years have you honestly paid your tax on property/income earned on property? The Govt. has to get some money to start a project. Would you goto a car dealer and tell him: I will give you no money and you give me a car. If the car works for a year or so, I will pay you the cost.

Yes, you are being assessed for tax. But to provide an army at the border, build non-urban/non-obvious infrastructure (dams, ports, Indian embassies, roads between cities), the Govt. needs money. True, the Govt is corrupt, our representatives go off on expensive, unproductive trips to Japan, Australia etc. But evading tax is not the right way to fight such mis-governance. Do your duty, and then fight for your rights. India exists because we pay our income tax properly. Paying one type of tax does not discount you from other taxes. If you would not even do that, then maybe our neighboring countries are better places for you.

Solace on the apartment front

I think the apartment search has come to an end. I found two people today who were ready to give out their PAN card numbers. They are going to give me a final replay tomorrow, but it does appear that it will be all clear.

Met Harsha today; it was nice. Also found out that Pulkit from HP is big time into AID.

Chiru’s political party was launched last night. It appears to me that the party would die as a whimper. Agreed that Chiru is a really great actor, has a huge fan following, and n excellent social network. However, he is not taking a stand (either good or bad) on any issues of importance.

The Kosi River in Bihar overflowed. Its course changed by 120 Kms and moved east. I am prompted to write to Mr Sarma who had earlier talked to me about connecting rivers. In these kinds of disasters, a project like river linking would be disastrous.

Landlord: I will not pay tax

I have been looking for apartments for the past week. Santosh had been showing me a few, and I had short-listed some options.

There was an owner whose house I really liked, but we were still haggling over the rent. I nevertheless give him my lease papers, ask him to fill it up over the weekend. I call my landlord on Sat to discuss the rent, and he tells me very reluctantly, “Sorry Surya for going back on our word, but it seems that my mother-in-law cannot give you her PAN card number”. I am like “Hmmm – OK, I will enquire with my office whether they need PAN card; they should let me know by tomorrow for sure”. “No Surya, I will need to know before 4:00 PM”. At around 2:30 PM on Sunday; there was no way anyone in my office would be around to give an official answer. I enquired around with a few friends in the same position, and am told that the companies do not ask for landlord’s PAN card. I call X back within half-an-hour and tell him “I have asked my colleagues and they did not need a PAN card”. This was wrong; I should have stuck to my stand that my office will tell me only the next day. I was ignoring the obvious – no matter what my friends say, my case could elicit a totally different response from the office. At the office the next day, I find out that of late, HP has made PAN cards mandatory for lease processing. Folks avoid paying tax totally by not giving their PAN cards. I was expecting some form of evasion among landlords, but the extent and lack of awareness/acceptance that it is a crime was slightly surprising. Think of a dude who has 40 plots all around Bangalore, and he never submits a PAN card number while giving out rental accommodation. He is making a TON of money and not reporting shit in income tax.

Mr. X is a really nice guy; if you talk to him you would know he is very reasonable. It is very likely that 16.99% tax deduction at source is a significant hit on their income. It is very likely that his mother-in-law has only that property, and that is her only source of income. Just then, I had a glorious revelation; if this were the case, she would get back all her money after filing for tax returns. All 16.99% of it would be given back to her; she will not lose any income. I could have explained all this to X; I discussed this at length with my folks, wife, and in-laws. Dad tells me that we file taxes for each piece of land, even the one in Ongole that we have not seen for the past few years. Mom says that it is likely several landlords will not agree to give me their PAN numbers and I will never get a reasonable apartment in my life. Dad disagrees.

I call Mr. X and tell him “Sorry sir, my office has asked me for a PAN card”. He is deeply shocked, understandably so – I should not have told him otherwise the previous afternoon. He mutters some discontent towards me, but I cannot help it. I am undecided now. I could pay him the entire 1.5 lakh security deposit out of pocket and take his house. He (Or rather, his mother-in-law) will in all likelihood not pay any tax. In all likelihood, several other landlords do not pay tax. Yes, our governance sucks, but we suck equally hard. If there were a contest in lollipop eating (Or a more raunchy contest based on ones’ ability to suck), the Govt. would come up toppers, but Indian citizenry would not be far behind.

I should probably send a letter to each landlord I know, urging him/her to file property taxes correctly. I will definitely write to Mr. X after I settle in. But how many different topics will I need to write about, and to how many people, to say that citizenship of a country comes with its rights. The right to being on a road has the responsibility to obey traffic. The right to own a house has the responsibility to obey housing law. The right to shit comes with the responsiblity to clean up after. If you do not meet your responsibilities, sooner or later your backside will not be very pleasent :). Light banter aside, this is precisely what is happening; Indian citizenry are being increasingly penny wise and pound foolish.

Driver, gaadi chalaao

I returned from Hyderabad today. Oh, how nice it felt to be driven by someone else for 1200Kms instead of sitting behind a steering wheel. True, driving is a nice pleasure and visiting places in a personal vehicle can let you explore a place in a better way than being driven around. But it sure is nice to have the option of being driven. Also, you leave a lesser carbon footprint by using public travel. I went to visit my in-laws in a Volvo bus. These things of German origin have emerged as current rulers of Indian roads and the premier name in public road travel. Indian road conditions have been completely overcome; pot-holes, rash drivers, un-pliable weather, everything is nullified by the great suspension, beastly horsepower, and well balanced interiors.

BTW:
Auto from Kormangala to Whitefield: Rs 173.00
Taxi cab from Whitefield to Kormangala: Rs 540
The ability to make calls and write an article while on the road: Priceless.

Driving my car-in-law at Hyderabad

Aug 23 and 24, I was at my in-laws. My maavaiyyagaru bought a car recently. We spent some nice time at the Tank Bund – it is a huge water reservoir in the heart of Hyderabad. We were driving down on road XYZ… I was behind the wheel; I had been behind the wheel for quite sometime now (Man, why did I agree to take the wheel in the first place). I came by an intersection where there was little traffic, but it had become chaotic. If the traffic had observed signals, it would have been much smoother. But no, everyone was rushing in irrespective of whether there was a red, green, yellow, black, blue, or some other god-forsaken light at the signal. Only if people would have waited for their turn, there would have been no congestion at that intersection.

Earlier that Saturday at around 8:30 PM, we were at a junction opposite a restaurant called “paradise” in Secunderabad. The 4-way intersection is quite busy, with people coming in from all directions, obviously not obeying the traffic light. I had to take a right. I waited for the light to change twice, but the prevailing mob traffic would not let me through. I begun to agreed with my in-laws that patience would keep me at the junction forever. Next time the light went orange, I continued to push forward, got myself into a position where I blocked the traffic on my right hand side. The next time around, I was able to make the turn. There was considerable honking, but I made the turn before everyone else. There was another guy who made the turn with me. He was a chap who turned out to be a tad bit more patient than me. He had waited for the third signal, and avoided considerable headache for the traffic on our right.

I surmised with my in-laws that there is little driver training in the country. I admit that driving in the US is downright boring and has too many rules. But the disorder in our country is equally appalling. More so, because the Indian driver can easily do better at following traffic. Only fools and short-sighted individuals can stand behind the façade of population and say that population is what causes current disorders in traffic. It is our lack of patience at following rules set by other Indians.

Laun-DRY

Rs 120 to wash 3 days of laundry. Does it take a lot of effort to wash, dry, and iron 2 लुन्गिस, three underwears, three T-shirts, and one formal shirt? I don’t know. But it certainly seems to be a lucrative business for the businessman and an expensive consumption for the consumer. Nevertheless, I am never going to have my clothes washed at the guest house. It is too pricey, even with the priceless feeling of wearing Jockeys that have been neatly pressed and probably starched.

CLA or HRA???

CLA is Company Leased Accommodation; a perk where the company signs the lease on your behalf, pays for the rent, security deposit, and maintenance. Of this, the rent is deducted from your salary and you have to pay tax on either 20% of your annual income or your rent, whichever is lesser. HRA is House Rent Allowance, where you can claim tax exemption for a part of your rent. I do a few back-of-the-envelope computations and determine that it is financially better to opt for HRA than for CLA. I end up paying double the tax in CLA than in HRA. However, paying the security deposit and dealing with maintenance is not a headache that I want to take when I am new in the country.

HR activities and apartment search

HR activities in the office; yawn!!! My apartment search is not going anywhere. वैसे, I am a stingy desi dude; will not spend half of my pay cheque on rent.