Shimoga proud to be first city to get 2000 seater MNC BPO

As I keep mentioning in my blog for devleoping tier 2 and tier 3 citites to ease the pressure on metro and other capital citites of any state. Here is a first step towards that direction from Government of karnataka which is promising development.

Why other countries out source their process?

Answer to this is very simple to cut cost and to increase their revenue. Over the period big citites in india itself become costly means outsourcing willnot act as WIN WIN for both sides. When tier -1 cities in india become costly in terms of rent, labour etc... next option would be looking at trier 2 and 3 cities.

When British Prime Minister David Cameron arrives in Bangalore this week as part of his India visit, he will grace an event that could finally signal the arrival of rural business process outsourcing in India. British business processing company Xchanging Plc founder David Andrews is set to sign an MoU with the Karnataka government, in the presence of the British Premier, to set up the first multinational BPO unit in India’s hinterlands.

Shimoga is getting ready with Airport which will give a very good boost in developing shimoga as next IT destination. Majority of talents working in bangalore are from that area only.

Xchanging will sign a deal to create a 2000-seat BPO in Shimoga, the home of Karnataka’s Chief Minister B S Yeddyurappa, but a tier III town for all practical purposes. The unit being established on a six acre property that falls within a SEZ is expected to be the biggest rural BPO venture to date in the country.

“One of our key aims for 2010 will be to leverage the arbitrage opportunities available through attractive incentives in the tier III and IV locations in India,” Xchanging reported in its 2009 annual report. “We are looking to expand our operations in India by moving work to cities that offer lower costs, such as Shimoga,” Xchanging, which has customers in 42 countries, reported last year.

 

While Indian BPO ventures like Rural Shores have attempted to do simple business process outsourcing work using the available rural work force, especially women, the big BPO players are still taking baby steps into the hinterlands.

What is stress test in USA?

The stress level of investors ahead of today's release of "stress test" results on Europe's banking system isn't as high as it was in the spring of 2009 when the global financial system was teetering and big U.S. banks were put through a similar test to see if they could survive if an already bad economy got worse.

This test will give a picture as to what is the maximum stress level a bank can take in the system.Still, Wall Street is hoping that the bulk of the 91 financial institutions in Europe undergoing the tests will pass — which is the current consensus view as European policymakers have issued reassuring comments. Investors also hope that banks that do fail won't have to raise massive amounts of additional capital. For those institutions that would need to raise cash, analysts say it will be important for them to specify how they plan to raise the money, either through financial markets, government aid or eurozone bailout funds.

Europe’s committee of bank supervisors has finally agreed on some basic criteria that should be applied in a series of co-ordinated tests of the ability of the region’s biggest banks to withstand a downturn. The idea of testing banks’ ability to withstand various scary scenarios is a sensible one. There is still some debate as to how much to credit the stress tests carried out in America for restoring trust in its biggest banks, but few people think they were a bad idea. Their big advantage is that they can help to address a fundamental flaw in the financial system: namely that it is difficult for outsiders to assess the health of a bank. In such circumstances it makes a lot of sense to invite outside examiners to rummage about in filing cabinets and ask difficult “what if” questions.

There is also a danger, however, in setting the bar too high, for markets would also be unnerved if many banks were to fail their tests. In America a reasonable balance could be found because markets were providing some indication of expected defaults and losses on toxic assets. In the case of Europe the issue is complicated by market interventions and politics. It is clear that the tests have to somehow take into account the possibility that one or more European countries may default on their debts. These may not be likely outcomes, but they are possibilities that have the markets on edge. Yet there is great reluctance across all European institutions to explore explicitly such a possibility.

Impact of RAFS on retailer | Restoring American Financial Stability Act of 2010 impact on US business

Restoring American Financial Stability Act of 2010(RAFS). This act runs in to 2,300 pages. RAFS will affect your pocket book. It all depending on how you manage your finances.

Now merchants will be permitted to set a minimum purchase of at least $10. Analysts expect that the upshot of this will be that many merchants who did not previously set minimums will do so now.

Regarding mortgages, liar loans presumably will vanish. Lenders will be required to fully document the borrower’s income and establish that borowwers have the ability to repay the loan.

Another provision that will affect individuals is the establishment of a liaison for the military in credit matters, though it is unclear what level or type of help the liaison will provide. The liaison will function through the CFPB.

RAFS will dictate that consumers who have suffered an adverse action because of information in their credit reports must now be given their credit scores for free. Adverse actions resulting from a poor credit score include a cost increase to insurance, being turned down for a job, or being charged more to lease a car or being denied altogether.

Currently, retailers are charged a fee (by VISA or MasterCard) for allowing consumers to use a debit card. RAFS will place a soft cap on that fee, meaning that the fee must be reasonable and proportional to the processing fees that the card companies incur. Bank analysts disagree on how much this will help consumers, but most do agree that of all the provisions of RAFS, this will have the greatest positive consumer impact.

The one or two percent that is now charged for debit card usage is “far higher than the actual cost of processing,” according to Sen. Dick Durbin (D-IL). The Federal Reserve will be empowered to monitor the fees by such means as allowing retailers to offer discounts depending on how consumers pay.

This bill has lot of consumer pro benefits which may be 

It creates a new independent watchdog, housed at the Federal Reserve, with the authority to ensure American consumers get the clear, accurate information they need to shop for mortgages, credit cards, and other financial products, and protect them from hidden fees, abusive terms, and deceptive practices.

It Ends the possibility that taxpayers will be asked to write a check to bail out financial firms that threaten the economy by: creating a safe way to liquidate failed financial firms; imposing tough new capital and leverage requirements that make it undesirable to get too big; updating the Fed’s authority to allow system-wide support but no longer prop up individual firms; and establishing rigorous standards and supervision to protect the economy and American consumers, investors and businesses.

It Creates a council to identify and address systemic risks posed by large, complex companies, products, and activities before they threaten the stability of the economy.

It will Eliminate loopholes that allow risky and abusive practices to go on unnoticed and unregulated - including loopholes for over-the-counter derivatives, asset-backed securities, hedge funds, mortgage brokers and payday lenders.

It Streamlines bank supervision to create clarity and accountability. Protects the dual banking system that supports community banks.

It Provides shareholders with a say on pay and corporate affairs with a non-binding vote on executive compensation.

It provides tough new rules for transparency and accountability for credit rating agencies to protect investors and businesses.

It Strengthens oversight and empowers regulators to aggressively pursue financial fraud, conflicts of interest and manipulation of the system that benefit special interests at the expense of American families and businesses.

Smaller SEZs to boost Growth in Tier 2 and Tier 3 cities | How to set-up SEZ in india

Tier -1 cities have allmost exhausted with it's own problem of congestion, pollution, traffic jam high cost of renting a place in business area, shortage of skilled labor force, high cost of labor etc...

Now Tier 2 and tier 3 cities can have half the size of normal 1,00,000 square meters to 50,000 square meters.

SETTING up special economic zones in smaller cities is set to become more attractive after the government has decided to reduce the minimum built up area requirement for sector specific zones such as IT,gems & jewellery and bio-tech in tier-2 and tier 3 cities.Similarly,gems & jewellery SEZs,requiring a built up area of 50,000 square meters,would now have a reduced requirement of 25,000 square meters in tier-2 cities In tier 3 cities such as Jaipur,Ghaziabad and Kochi,the minimum built up area requirement has been brought down further to 25% of the original requirement.

The guidelines have also given a 10-year deadline to developers for setting up the required infrastructure in a bid to weed out non-serious SEZ players.The built up area requirement for SEZs so far was too large to attract developers in small cities as investors wouldnt want to put in money in building infrastructure without knowing whether the whole of it would get occupied, pointed out Raju Bhatnagar,vice president,Nasscom.With the reduction of the required built up area by half for tier 2 cities (relatively small cities usually with less than one million population) and by a fourth for even smaller tier 3 cities,investments in such zones have become more attractive,he added.

According to a notification put out by the commerce department,SEZs in tier-2 cities such as Madurai,Varanasi,Raipur,Amritsar,Agra and Asansol will have a minimum built up area half of the earlier requirement.

How to amend 1040 | Tips to amend US tax return

You can make a change or an adjustment to a tax return you’ve already filed by filing an amended return. Here are the top 10 things the IRS wants you to know about amending your federal tax return.

If you need to amend your tax return, use Form 1040X, Amended U.S. Individual Income Tax Return.

Use Form 1040X to correct previously filed Forms 1040, 1040A or 1040EZ. The 1040X can also be used to correct a return filed electronically. However, you can only paper file an amended return.

You should file an amended return if you discover any of the following items were reported incorrectly: filing status, dependents, total income, deductions or credits.

Generally, you do not need to file an amended return for math errors. The IRS will automatically make the correction.

You usually do not need to file an amended return because you forgot to include tax forms such as W-2s or schedules. The IRS normally will send a request asking for those documents.

Be sure to enter the year of the return you are amending at the top of Form 1040X. Generally, you must file Form 1040X within three years from the date you filed your original return or within two years from the date you paid the tax, whichever is later.

If you are amending more than one tax return, prepare a 1040X for each return and mail them in separate envelopes to the IRS campus for the area in which you live. The 1040X instructions list the addresses for the campuses.

If the changes involve another schedule or form, you must attach it to the 1040X.

If you are filing to claim an additional refund, wait until you have received your original refund before filing Form 1040X. You may cash that check while waiting for any additional refund.

If you owe additional tax for 2009, you should file Form 1040X and pay the tax as soon as possible to limit interest and penalty charges. Interest is charged on any tax not paid by the due date of the original return, without regard to extensions.

Source : IRS

free download of new ruppee symbol | New INR symbol for free download

Download New Ruppee symbol here.

Extract the content and follow the instcurtions given below.


How to use ?

1. Download the above attached font Rupee.ttf or the new version Rupee_Foradian.ttf

2. Install the font. (It is easy. Just copy the font and paste it in "Fonts" folder in control panel) i.e. goto start run and paste C:/Windows/Fonts  and paste the downloaded font.

3. Start using it. :)

4.Use the first keyword of your keyboard which will have   "`" symbol and above that "~" symbol and choose the new ruppee font you will get new Ruppee symbol

Related article:
Source:Foradian

Wall Street Reform Bill passes

WASHINGTON: The US Senate has passed the Wall Street Reform Bill that will make financial institutions more accountable and make them pay for any repeat of a 2008-like credit crisis by liquidating their assets.


The President, Mr Barack Obama, is expected to sign the bill, passed by the Senate by a 60-39 vote, into a law next week. The House of Representatives had already passed the bill earlier this week.

The bill now goes to the White House for Barack Obama to sign in into law. This will create new protections for millions of consumers.

The passage of the bill was immediately welcomed by the Obama Administration and lawmakers.

"The financial reform legislation approved by the Congress represents a welcome and far-reaching step toward preventing a replay of the recent financial crisis," said Ben S Bernanke, Chairman of the Board of Governors of the Federal Reserve System.

Incredibly, three of the four biggest banks in the country are larger today than they were before taxpayers bailed them out. Sanders also wanted the bill to impose a cap on runaway credit card interest rates.


Among others, the provision requires extractive companies listed on US stock exchanges to disclose, in their SEC filings, payments made to governments for oil, gas and mining.

IRS will verify Quickbooks file...

This is from the National Assoc. of Tax Professionals: FYI. This will be interesting.

NATP has learned that IRS agents are being instructed to obtain a copy of the taxpayer’s data base for examinations for any taxpayer who uses QuickBooks. This will not be done in all examinations, only for those that the IRS agent deems necessary based on the judgment of the agent. If the taxpayer refuses to provide the database and the revenue agent (RA) or manager determines it is necessary, a Summons to obtain the information would be issued. The agents would look at only the information for the year under audit unless they decided to expand the examination to prior years, then information for those years would be reviewed.

The IRS has purchased 1,500 to 2,000 licenses from Intuit and will have one agent trained and licensed per group to assist others in the examination of taxpayers who use QuickBooks. You may not have heard of this yet, but as the software finds its way into RA groups and more agents are trained in its use, we could definitely be seeing a trend in the way exams are conducted since so many small businesses use QuickBooks.

 

Although the data file generally retains information from the date of initial input to the date of backup which could obviously include multiple years in addition to the actual audit year, agents are instructed to look at the information only for the year under exam. If there is a decision to expand the examination to prior/subsequent years, then information for those years could be reviewed. As mentioned, using the cleanup utility condenses prior year information into a summary, rather than a detailed, format.

As the software finds its way into RA groups and more agents are trained in its use, we could definitely be seeing a trend in the way exams are conducted since so many small businesses use QuickBooks.

So it is a wake-up call for all sme's to keep their QB files in tact and upto date and error free.

IRS has found that many taxpayers do not save hard copies of their records or the copies they have are incomplete. The Service also found that taxpayers reuse an old version and over write the prior year. The examiner may request the data base to verify the integrity of the internal controls. A definite problem could arise where a client thinks they have turned off the internal audit feature to avoid tracking of adjusting entries but the program does not totally delete these items.

If the qualified representative (power of attorney) considers the Revenue Agent's request for the data base as totally unnecessary, he/she should speak to the agent's group manager. But as experience has shown, once a Revenue Agent discovers the taxpayer uses QuickBooks, the Agent will almost always deem it necessary to have a copy of the database. If the taxpayer/representative refuses to provide the data base and the revenue agent/manager determines it necessary, a Summons to obtain the information would be issued.

While Rev Proc 98-25 provides the authority for the IRS to request electronic records, in most cases (with exceptions), the Service will generally request the data file if some sort of electronic system was used. It is indeed up to the agent's and manager's judgment at the group level to make the request.

New credit card norm from RBI

Credit card if used prudently and paid in time will always be a pleasure to have. May discounts offered like if you buy 2 tickets you will get waiver for one ticket fees and may more discount on flight booking , EMI offer at Zero processing charges , Loan on phone without any documents but but if you fail to pay any of your credit card bill in full then see your next month's statment. Your will feel like your ground is taken off from you. You will find Late payment charges, interest on outstanding plus recently purchased items. The interest rate will be in single digit like 3.5 % to 4 % not per annum but per month. If you calculate per year it will be around 48%...... Just like a private money lenders... Keeping in mind RBI has come up with the following new norms.

MUMBAI: The RBI on Friday warned banks and financial institutions to strictly follow its guidelines on credit cards regarding transparency in charging interest rates and levying other fees on customers or face penal action.

“All banks are once again advised to strictly adhere to the guidelines… both in letter and spirit,” an RBI circular said, adding that the violation would invite penal action.

The RBI has issued fresh directives in view of the numerous complaints from credit card holders, especially with regard to excessive finance charges and issuance of unsolicited cards, it said.

Besides, complaints like charging annual fee on what were being offered as free cards, issuance of loans over phone, disputes over wrong billing, difficulty in accessing the credit card issuers and poor response from the call centres, it said.

Giving detailed guidelines for credit card operations, the RBI had earlier asked the banks to declare upfront the interest rate, various charges and the methodology of calculation of finance charges with illustrative examples.

As per an RBI circular issued in 2007, card companies should prescribe a ceiling rate of interest, including processing and other charges in case of small value personal loans and loans similar in nature.

There should be transparency in levying differential interest rates, it had said, adding, the banks should publicise through their website and other means, the interest rates charged to various categories of customers.

The circular also advised banks to indicate to the credit card holder upfront, the methodology of calculation of finance charges with illustrative examples, particularly in situations where only a part of the amount outstanding is paid by the customer.

RBI had also asked banks to ensure that wrong bills are not raised and issued to customers. In case, a customer protests any bill, the bank should provide explanation and, if necessary, documentary evidence to the customer within a maximum period of sixty days with a spirit to amicably redress the grievances, the circular had said.

There are host of banks, which issue credit cards, including ICICI Bank, HDFC Bank, SBI Cards, Punjab National Bank. Besides, many foreign banks like Standard Chartered, HSBC, Citibank also offer them.

There are about 1.9 crore credit card users in India.

NHS work outsourced to india may go back

LONDON: A petition has been launched in Britain to try to stop details of patients in Derbyshire being sent to India for medical transcription.

The plan to process some personal data overseas was put forward earlier this year in a bid to save five million pounds from the budgets of the East Midlands' nine health authorities.

The union Unison has started gathering signatures against the proposal.

"We know the service will be a lesser one when done from India. And in this economic climate, local people don't need to be losing jobs. The NHS needs to be brave enough to ask its staff to make the savings," said Barbara McKenna, regional head of health for Unison.

The plans have been put forward by NHS Shared Business Services, which is a partnership between a private IT company and the Department of Health.

It already provides some financial services on behalf of local NHS trusts.

Under the proposal, staff would work from several sites in the East Midlands with additional services provided from India, a system already in place with 130 NHS trusts.

Sept. 30 for Eligible Homebuyer Credit Purchases | IRS Deadline for home buyer

WASHINGTON — Eligible taxpayers who contracted to buy a home, qualifying for the first-time homebuyer credit, before the end of April now have until Sept. 30, 2010 to close the deal, according to the Internal Revenue Service.

The Homebuyer Assistance and Improvement Act of 2010, signed by the President today, extended the closing deadline from June 30 to Sept. 30 for any eligible homebuyer who entered into a binding purchase contract on or before April 30 to close on the purchase of the home on or before June 30, 2010. The new law addresses concerns that many homebuyers might be unable to meet the original June 30 closing deadline.

The IRS reminds taxpayers that special filing and documentation requirements apply to anyone claiming the homebuyer credit. To avoid refund delays, those who entered into a purchase contract on or before April 30, but closed after that date, should attach to their return a copy of the pages from the signed contract showing all parties' names and signatures if required by local law, the property address, the purchase price, and the date of the contract.

Besides filling out Form 5405, First-Time Homebuyer Credit and Repayment of the Credit, all eligible homebuyers must also include with their return one of the following documents:

A copy of the settlement statement showing all parties' names and signatures if required by local law, property address, sales price, and date of purchase. Normally, this is the properly executed Form HUD-1, Settlement Statement.

For mobile home purchasers who are unable to get a settlement statement, a copy of the executed retail sales contract showing all parties' names and signatures, property address, purchase price and date of purchase.

For a newly constructed home where a settlement statement is not available, a copy of the certificate of occupancy showing the owner’s name, property address and date of the certificate.

Besides providing a tax benefit to first-time homebuyers and purchasers who haven’t owned homes in recent years, the law allows a long-time resident of the same main home to claim the credit if they purchase a new principal residence. To qualify, eligible taxpayers must show that they lived in their old homes for a five-consecutive-year period during the eight-year period ending on the purchase date of the new home. Homebuyers claiming this credit can avoid refund delays by attaching documentation covering the five-consecutive-year period:

Form 1098, Mortgage Interest Statement, or substitute mortgage interest statements,

Property tax records or

Homeowner’s insurance records.

There are three options for claiming the credit on a qualifying 2010 purchase:

If a 2009 return has not yet been filed, claim it on Form 1040 for tax-year 2009. Though these returns cannot be filed electronically, taxpayerscan still use IRS Free File to prepare their return. The returns must be printed out and sent to the IRS, along with all required documentation. The IRS urges taxpayers claiming refunds to choose direct deposit.

If a 2009 return has already been filed, claim it on an amended return using Form 1040X.

Whether or not a 2009 return has been filed, wait until next year and claim it on a 2010 Form 1040.

More details on claiming the credit can be found in the instructions to Form 5405, as well as on the First-Time Homebuyer Credit page on IRS.gov.

International Financial Reporting Standards and BPO opportunity

Coming  2014, the US will align its accounting practices with the International Financial Reporting Standards (IFRS) – a system of harmonised standards recommended by the International Accounting Standards Board, an independent body of the International Accounting Standards Committee Foundation.

Over 100 countries mandate that companies operating on their soil conduct financial reporting in accordance with IFRS. India is to get on to the IFRS regime in a phased manner beginning next year. The US, which follows its own system – the US Generally Accepted Accounting Practices – will migrate to IFRS from 2014.

Big business opportunity:

Experts see a huge business opportunity for Indian BPO firms in this migration.

Mr Dolphy D’Souza, IFRS Leader, India – Ernst & Young Pvt Ltd, said the vast number of companies in the US in itself gives birth to a need for outsourcing work related to the migration. The US does not have enough resources to migrate to IFRS on its own, he told Business Line on Monday. “A large chunk of work will come to India.”

But even after the migration exercise is over, Indian BPOs would enjoy business opportunities in terms of “lot of bookkeeping work”. India, Mr D’Souza said, could become the “accounting hub” of the world.

Mr Som Mittal, President, Nasscom, concurs with this view. He said that any compliance issue in the developed world would potentially lead to business opportunities for Indian BPOs.

Mr Mittal sees India doing more and more of value-added work (such as IFRS-related) .

A Nasscom study states that in the three years to 2009, revenues of Indian BPOs grew 30 per cent, while the headcount grew only 20 per cent.

What is IFRS?

 

International Financial Reporting Standards (IFRS) are Standards, Interpretations and the Framework  adopted by the International Accounting Standards Board (IASB).

Many of the standards forming part of IFRS are known by the older name of International Accounting Standards (IAS). IAS were issued between 1973 and 2001 by the Board of the International Accounting Standards Committee (IASC). On 1 April 2001, the new IASB took over from the IASC the responsibility for setting International Accounting Standards. During its first meeting the new Board adopted existing IAS and SICs. The IASB has continued to develop standards calling the new standards IFRS.

 

Big Changes Proposed for Revenue Recognition

FASB and the IASB on Thursday released a proposal that would create a single revenue recognition standard for both U.S. GAAP and IFRS. The standard is designed to streamline accounting for revenue across industries and correct inconsistencies in existing standards and practices. (Journal of Accountancy)

cosmicsanthosh's Profile on Ping.sg 

New INR symbol | New Symbol for Indian Ruppee

THE rupee symbol is set to enter the software lexicon,computer keyboards and mobile phones.Soon,software vendors will get ready to tweak their operating systems (OS),the heart of a computer which holds together the hardware and software,to make that small but important change recognising a new symbol in the software vocabulary.Once they do that computer users the world over will be able to type the rupee symbol on their keyboards as a keystroke or combination of keystrokes.

It could also open a new market for keyboards and printers with the latest symbol incorporated.The phase out period for Rs to the new symbol will also bring in some fresh orders for IT equipment in banks to stock brokerages to insurance companies,hardware vendors expect.The countrys largest PC makers,HP and HCL,are already making plans to introduce new equipment.New keyboards will also have the rupee symbol.Though,we expect a time delay by the government before the old format of denoting rupee is phased out in banks, says George Paul,marketing head at HCL Infosystems,Indias largest domestic PC manufacturer.

Software giant Microsoft,which makes the topselling Windows OS,said it was too early to comment on when they will incorporate the symbol for the rupee.As and when it is approved we will work towards it, said a Microsoft spokesperson.Microsoft already provides local language support in 4 Indian languages namely Hindi,Malayalam,Marathi & Tamil for Windows XP.Windows Vista has support for 12 Indian languages from localised keyboards,fonts,shaping and collation of characters.For the symbol to start appearing in your documents and spreadsheets,the OS vendors will have to incorporate it in their code.

Source: Economic times

LLC formation in USA for free

What is an LLC?

At the basic level, when you form an LLC you are creating a type of business formed at the state level.  There can be many benefits to forming an LLC with the state.  LLC's can also offer tax advantages, limit your liability for business debts, and much more.  However, with all the benefits of starting an LLC also come obligations such as more accounting, changes in tax issues, and some additional paperwork regarding your LLC filing. 

LIMITED LIABILITY COMPANY (LLC)

The LLC is a relatively new type of hybrid business structure that is available in most states and must be formed on a state-by-state basis, i.e. form a WY  LLC if doing business in WY. It is designed to provide the limited liability features of a corporation and the tax efficiencies and operational flexibility of a partnership.  The process of forming LLC partnerships is more complex and formal than forming general partnerships. 

The owners are called members, and the duration of the LLC is usually determined when the organization papers are filed.  The life of an LLC can be perpetual, or shorter if determined by the members.  The time limit can be continued if desired by a vote of the members at the time of expiration. 

Taxable liability for an LLC.

LLC's are more like partnerships, providing management flexibility and the benefit of pass-through taxation.  Pass-through taxation means that taxable income of the business will "pass through" to the owner’s individual tax return.  Federal and state tax laws treat a LLC like a partnership; or for a single member LLC, like a sole proprietorship.  

Forming LLC partnerships basically allows the owners or members of the LLC to record their taxable income on their individual income tax returns like partners and sole proprietors.  However, a LLC can be treated for tax purposes like a corporation by electing corporate tax treatment.  

Cost of forming LLC in USA will be around $325 to $600 depending on state where you wish to form LLC.

There are many different ways of forming a company, including as a sole proprietorship, a partnership, or a corporation.  Each has its own advantages and disadvantages.  One major benefit of a sole proprietorship or partnership is the flexibility in tax reporting of business income and expenses.  Business profits and losses are passed through to the owners/partners who are then taxed at their individual income tax rates.  The biggest disadvantage of either a sole proprietorship or a general partnership is that the owners/partners are personally liable for all business debts and claims.  Incorporation, on the other hand, gives limited liability protection to its owners but does not have the tax flexibility of a sole proprietorship or partnership. 

Advantages of the LLC Entity 

• Owners have limited liability from business debts 
• Can include more than 35 shareholders 
• LLC is not a separate taxable entity, which removes the threat of double taxation 
• Owners need not be United States citizens 
• Limited personal liability: pass through income/loss to your personal income 

Outsource Bookkeeping or Accounting

The Internet has become a much powerful tool these days. It's no longer a portal for information. Most of all, it allows people to communicate a lot faster and easier. Most of all, it has given us more freedom, especially when it comes to work.

If we're running our own business, we can make use of the World Wide Web to outsource some aspects of our business, such as online bookkeeping services. This means that you let somebody else who could be working at the comfort of their own home or in their favorite coffee shop do the invoicing, payroll, and maintenance of our business transactions and finances. In reality, though, convenience isn't only something we can enjoy from online bookkeeping services. There are still a lot more.

1) We can cut down on our costs. One of the foremost reasons why a lot of businesses today prefer to settle for online bookkeeping services is because they want to minimize the costs that their business incurs every month. Outsourcing would mean that we no longer have to keep a facility, so we can save from rent and huge utilities expense. When it comes to salaries, we will have someone who can work on our business transactions at a much lower rate than an in-house bookkeeper. This is because they also no longer have to think about their transportation and food allowance.

2) We can be more confident when it comes to running our business. Starting an enterprise is difficult, but it's a lot harder when we're just working alone or keeping an incompetent staff. Going for online bookkeeping services, meanwhile, will assure that we will be in the hands of experts. These are people who don't only have the degree or the knowledge to speak of, but most of all; they also have the skill and the experience. All these can make us feel more secure, especially in operating our business.

3) We can rely on the knowledge and technical expertise of our team. If we don't know anything about bookkeeping, then it's definitely a very wise idea to hire someone who does. That's where we can avail of online bookkeeping services. We can skip ourselves from learning from scratch. Nevertheless, if we want to know even the basic bookkeeping roles, we can also depend on the team to give the proper education that we need.

4) We can take advantage of the technology they have. Today online bookkeeping services are already equipped with the latest programs and software that allow them to perform their services more effectively and efficiently. For example, they are well-trained in setting up, customizing, and monitoring QuickBooks transactions. As a business owner, we no longer need to purchase equipment and software. After all, these online bookkeeping services already have everything that we could be looking for.

5) We have somebody who is always on call. Do we need to get our previous month's report immediately? We don't have to wait for days before we can receive one. A lot of online bookkeeping services already have customer support representatives who are available 24 hours a day, 7 days a week, preventing any delay.

Are we tired of doing so much accounting for our company each year? Do we get bored of doing the same thing again and again? For a small firm the accounting work is handled by the entrepreneur since there is no scope of employing a CPA to handle the accounts. Hence with the basic information on accounts the entrepreneur has to manage the balancing of accounts and searching for the errors. Along with that he has to manage the business and look at the progress of the business and what are the weaknesses so that they can be developed into the strengths. All this is bound to make the entrepreneurs go crazy. This makes accounting outsourcing a great option.
For big firms the expenses are way too much to maintain an accounts department. The condition of the business is not that great and the businesses all over the country have been experiencing perishing sales. Along with this, maintaining an entire department to handle something which does not aid the process of sales directly becomes a big problem. Big firms have bigger expenses and not maintaining a budget on these expenses have made the firms realize that they would have to incur losses.
Accounting outsourcing can be defined as a business giving all its accounting work to another firm for a payment which is far less then getting the job done within the business. This is because of the concept of economies of scale. The firms that do the business of accounting outsourcing employ expert accountants who not only manage the accounts for one company but for an entire portfolio of companies. This makes them earn a profit as well as enables the company to save on the costs of accountants.
Along with accounting outsourcing, comes the concept of secrecy. The firms that manage the accounting outsourcing are sworn to secrecy since the accounts of the company are the true face of its dealing. Hence the firms that use the services of accounting outsourcing are assured that their accounts will not be cheated or used for the knowledge of other businesses. Instead the company would get added help by the accountants who would point out the weaknesses or errors in the accounts as well as the business so that the business can prosper.

There are many firms that have come up with the idea of accounting outsourcing. This trend has been experienced due to the current recession in the US economy. All the firms that have been using the services of accounting outsourcing have experienced the surge in profits because of the savings in costs. For small scale businesses, it is ideal to opt for local accounting outsourcing service provider. This will reduce the hassles of dealing long distance business relations.

We can also avail search engine optimization services from such outsourcing service providers who will aid us in developing great Internet profile for our firm. Search engine optimization will give a huge leap to our business online and let it reach global audience.

Elements of Good bookkeeping

Types of Bookkeeping

Bookkeeping is the recording of financial transactions. Transactions include sales, purchases, income, and payments by an individual or organization. Bookkeeping is usually performed by a bookkeeper. Bookkeeping should not be confused with accounting. The accounting process is usually performed by an accountant. The accountant creates reports from the recorded financial transactions recorded by the bookkeeper and files forms with government agencies. There are some common methods of bookkeeping such as the Single-entry bookkeeping system and the Double-entry bookkeeping system. But while these systems may be seen as "real" bookkeeping, any process that involves the recording of financial transactions is a bookkeeping process.

A bookkeeper (or book-keeper), also known as an accounting clerk or accounting technician, is a person who records the day-to-day financial transactions of an organization.] A bookkeeper is usually responsible for writing the "daybooks." The daybooks consist of purchase, sales, receipts, and payments. The bookkeeper is responsible for ensuring all transactions are recorded in the correct daybook, suppliers ledger, customer ledger, and general ledger. The bookkeeper brings the books to the trial balance stage. An accountant may prepare the income statement and balance sheet using the trial balance and ledgers prepared by the bookkeeper
Elements of a Good Record Keeping System

• Business checking account - Do not use the personal checking account for business. A business checking account allows all business transactions to be well documented. If small businesses with only a few transactions, a combination check/record system is available.

• Pay all bills by check - Mark on each check what was purchased. This is the record of having paid bills and enables analysis of expenditures.

• Petty cash for small expenses - Use it sparingly. Make sure all expenses from petty cash are supported by documents showing their business purposes. When the petty cash fund gets low, write a check from the business checking account to restore it to the original amount.

• Deposit receipts often - Don't keep cash or checks lying around that can invite theft and loss; put the money to work immediately.

• Support the entries - Canceled checks, paid bills, duplicate deposit slips and other items that support entries in the books should be filed in an orderly manner and stored in a safe place. Let the bank help us with our records by providing documentation of income through deposits and expenses.
Manual Bookkeeping/ Manual Accounting Systems

It doesn't always make sense to use a software program like QuickBooks. If you are a very small business or simply spreadsheet challenged, a manual bookkeeping system may be in order. Using this simple process, we can set up a basic bookkeeping system in just a few hours.
Manual Accounting Systems, although less common today are still the primary choice of record keeping for some small businesses.
In other cases a manual bookkeeping regime may be maintained in addition to a computerized system, and thus provide an additional layer of internal control mechanism for the business.
Manual accounting and bookkeeping systems are the traditional form of maintaining a businesses accounts and records.
They involve keeping various ledgers and files which typically include a cash book, sales and purchase day books and petty cash sheets.

Although the use of basic manual bookkeeping systems requires little knowledge or skill in accounting, they are still the preferred method of accounting for those who have used them in the past.

US Visa fees increase effective June 4th 2010

All US consular sections will from June 4 introduce a two-tiered fee structure for non-immigrant visas.All applicants for business or tourism (B-1 /B-2 ),crew member (C-1 /D),student (F or M),or exchange (J) categories will now pay $140 and receive a white receipt.

Petition-based work visa applicants (H,L,O,P,Q and R categories) will pay $150 and receive a green receipt.K (fiancee ) applicants will pay $350.

Applicants who purchased their receipts before June 4,will pay the balance between the old and new fees at the time of the interview.The previous application fee was $131.

As of June 4th, 2010, all U.S. Consular Sections worldwide will introduce a new fee structure for nonimmigrant visas.

All non-petition based applicants will now pay $140.
All petition based applicants (H, L, O, P, Q and R categories) will now pay $150.
K (fiancé) applicants will now pay $350.

Instructions for additional payment required for applicants with appointments scheduled at the U.S Consulate General, Mumbai on/after June 4th follow below:

If you purchased your HDFC fee receipt before June 4th, you must obtain an additional demand draft for the difference.

Visa Categories Additional payment draft amount
non-petition based applicants $ 9
petition based applicants $ 19
K (fiancé) applicants $ 219


The difference must be paid by a demand draft favoring “American Consulate General Mumbai” (Cooperative bank demand drafts not accepted).

Demand draft to be made in INR payable at the current rate of exchange. Please check the link https://www.vfs-usa.co.in/USIndia/applicationfee.html on this website for the applicable rate of exchange. Applicants must carry their demand drafts on the day of their scheduled visa appointments.

IT and BPO staffs can work from home | internet work from home

The government has also allowed employees of IT units in SEZs to work from home or off-site locations. “Off-site employees of SEZs may be permitted to work from home or from place outside the SEZ,” the letter dated May 21 said.

IT / ITES companies can outsource their overseas jobs to units in the special economic zones, a move that will help SEZs become BPO centres. “IT units in the domestic tariff area can carry out their jobs in SEZ units,” the commerce ministry said in a communication to the SEZ development commissioners.

Earlier, this relaxation was given to only “de-capacitated” employees or those who are travelling.
The decision comes following representations from IT companies and professionals, SEZ developers and other stakeholders.

Industry people said with the flexibility, employees would be able to attend customer problems even when they are away from SEZs.

Allowing of authorized employees of IT/ITES units in SEZto work from Home


Instruction No. 58, dated 21-5-2010
In partial modification of the Instruction No. 55 dated 5th May, 2010 issued by the Department of Commerce on the above mentioned subject, this is to clarify that off-site employees of SEZ may be permitted to work from home or from place outside the SEZ subject to the same conditions as prescribed in the instruction.

2. IT units in DTA can carry out their job-work in a SEZ unit by following the procedure as laid down in Rule 43, of SEZ Rules 2006.

Mysore airport ready but No airlines ready to fly

With major airlines refusing to operate out of Mysore,the state governments plan to set up five more small passenger airports,with an investment of Rs 1,200 crore,has hit a roadblock.
The airport,built at a cost of Rs 82 crore,allows only ATR-72 type aircraft to takeoff and land.It will be upgraded to accommodate Boeing 737 or A-320 sized passenger crafts,which are used by leading airlines,only in the second phase.

Even as the airport was officially inaugurated by chief minister BS Yeddyurappa here on Saturday,private airlines steered clear. No private airlines took off from the newly built airport, an official said.Early this week,major airlines,including National Carrier Air India,had declined invitations to fly to the newlybuilt airport.The airlines cited poor passenger load as the reason for their reluctance to operate out of Karnatakas second largest city.

The Karnataka government has plans to develop airports in every district of the state and has sought private participation for infrastructural development.
Other airports are coming up at Bellary,Bijapur,Hassan,Shimoga and Gulbarga,all under the Public Private Partnership (PPP) model.Three private players Jupiter Group of Rajeev Chandrasekhar,Chennai-based infrastructure player MARG and Hyderabad firm,Maytas have won the bids to run these airports on a Build Operate and Transfer (BOT) basis.

With this there is greater potentail for IT and BPO companies to set-up their offices/ development centre at mysore which willnot only ease traffic congestion of Bangalore but also helps in overall development of the state. There is always a demand by IT companies to have airport for connectivity ease which is fulfilled by karnataka Goverment.

First financial services SEZ to be discussed next month

First financial services SEZ to be discussed next month

NEW DELHI: The government will consider next month a proposal for setting up the countrys first financial services sector special economic zone (SEZ).Diversified corporate entity GMR Group has submitted a proposal to the Centre for setting up this international financial services-focussed SEZ in Hyderabad.Commerce Ministry,the nodal agency for clearing SEZ proposals,will take up the GMRs request on June 8.Their (GMR) request is on agenda.It will be taken up in the next BoA meeting, additional commerce secretary D P Mittal said.The inter-ministerial board of approval (BoA) is headed by Commerce Secretary Rahul Khullar.

Tax heaven for BPO

BRITISH Columbia has one of North America's most competitive business climates low tax burdens,minimal red tape and a supportive,financially responsible government.Its residents with incomes up to US$118,000 now pay the lowest income tax in Canada.Taxes have been reduced over 120 times during the past nine years,benefiting businesses,individuals and families.

In the next two years,planned changes to BC's federal and provincial corporate tax rates will result in a reduction to 25% the lowest in the G7.The regions general corporate income tax,currently 10.5%,will drop to 10% in 2011.The federal corporate tax rate is currently 18% and is set to be reduced to 15% by 2012.British Columbia has an effective Corporate Income Rate Tax* (Federal & Provincial) of 16.1%,as compared to 35% in San Francisco.

British Columbia has also expanded the tax credit base for its venture capital programs to US$30 million annually,including US$7.5 million for British Columbia's clean technology companies.BC businesses can now access up to US$100 million of venture capital.

Vancouver where the tax rate is just 16.1% seems to be most attractive IT/BPO destination.

Threat for IT / ITES sector in india-Service tax credit

BPOs & ITES may have to pay more service tax soon

Crucial Case To Decide On Input Tax Credit

Deepshikha Sikarwar NEW DELHI

INDIAS thriving BPOs,ITES and other services exporters could see a much higher outgo on account of service tax if a ruling by a tax tribunal goes unchallenged.The Service Tax Tribunal has,in a recent decision,questioned the very concept of input tax (Cenvat) credit,which means that exporters of services may not be able to claim credit for taxes paid on inputs used by them in providing those services.

The Custom Excise & Service Tax Appellate Tribunal decision has come in a case relating to Kbase Tech Pvt Ltd & Others.The judgement can open a can of worms for the industry as field officials can use it as a basis to reopen cases and slap show cause notices on companies to claim tax.

The industry will take this up.I am sure the CBEC,which had only clarified the interpretation of the law,will itself take care, Som Mittal,president,Nasscom said.Input tax refunds on services has been a contentious issue for a while.The primary issue in case of service tax refunds has been the proof of linkage between the input services used and the output services exported.

The ruling relates to a beneficial circular issued by the Central Board of Excise and Customs (CBCE).

The issue of refunds was thought to be settled in January when the CBEC issued this circular after intense lobbying by the software industry body Nasscom.

The tribunal ruling,which has held that the rule that defines input service is ultra vires,or beyond the powers of the relevant law,will now again raise uncertainity.

If the very definition of input services is not legally tenable,the question of providing credit for the tax paid on the same did not arise.

This decision unsettles the principle of allowing Cenvat credit by challenging the very existence of the Rule which allows the credit which has been tested and held to be favourable by the Supreme Court and the High Courts, says Prasad Paranjape,partner,PDS Legal.The apex indirect taxes body had in January,2010 issued a circular directing its field officials to issue pending service tax refunds within 30 days.

The circular had cleared the ambiguity over definition of services used as inputs by technology and BPO companies.

Service tax paid on inputs,such as transportation of staff,telecom facilities,software maintenance and up-grades,provision of food to employees working in 24x7 environment,hiring recruitment agencies and other related services were made eligible for refund.

CHANGING DEFINITION

The service tax tribunal has,in a recent decision,questioned the very concept of input tax (Cenvat) credit,which means that exporters of services may not be able to claim credit for taxes paid on inputs used by them in providing those services

The Custom Excise & Service Tax Appellate Tribunal decision has come in a case relating to Kbase Tech.Officials can use it as a basis to reopen cases and slap show-cause notices on companies to claim tax

There is a need for continuing cenvat credit for IT/ITES sector. In India we have multiple level taxation which is not good for any industry and need to reduce statutory formalities for IT/ITES companies

EU may resume Flight operation soon.....

With news continuing to pour in about efforts to restore air travel, the inadequacy of technology to provide definitive answers about the threat of volcanic ash has become a central concern for scientists.

As of Sunday afternoon, there was some indication that the eruptions from the Eyjafjallajokull volcano in Iceland may be abating. While cloud cover prevented scientists from getting a good view of the eruption, radar measurements suggested that the ash plume wasn't above 10,000 feet on Sunday, after rising to 30,000 earlier.

After tril run of the unmanned flights without any problem has given some indication as to engine and flight will work without any problem in such ashes has given some hope of flight operation restoration from European countries.

But EU transport ministers are only now holding emergency talks by video conference on how to ease the air travel crisis.

Airline industry is loosing £130m a day as a result of such stoppage of flight operation. Flight to US is resumed.

Dr Craig Underwood from Surrey University said: ‘Aircraft routinely carry radar to check for weather but the trouble is the particles of ash are too fine for the radars to detect so pilots can find themselves suddenly in a plume without any warning.

Wall Street reforms to protect investors

US President Barack Obama urged US lawmakers Saturday to move forward on finance reform designed to stave off future meltdowns,promising to hold Wall Street accountable.This issue is too important, Obama said in his weekly radio address.

The costs of inaction are too great.We will hold Wall Street accountable.We will protect and empower consumers in our financial system.Thats what reform is all about. A bill under consideration in the US Senate would introduce a slew of Wall Street reforms,creating a potentially powerful consumer financial protection agency,placing checks on executive bonuses and curbing risky investments.It also establishes a special fund,paid for with contributions from the big banks themselves,to cover the costs of liquidating firms sometimes described as too big to fail,rather than propping them up.

The bill has already passed the Senate Banking Committee on a 13 to 10 vote,but no Republican supported it.Obama argued that the current economic crisis could have been avoided if Wall Street firms had been more accountable,its financial dealings more transparent,and if consumers and shareholders had been given more information and the authority to make decisions

Source: Economic times

IRS helpline for Tax filers

More Than 180 Local IRS Offices Open This Saturday to Help Taxpayers

WASHINGTON — The Internal Revenue Service announced today that IRS offices will be open nationwide on Saturday, March 27 from 9 a.m. to 2 p.m., local time, to help taxpayers. The location of participating offices is listed on IRS.gov.

“We are holding these special open houses to give taxpayers who are struggling in these difficult economic times more opportunity to work directly with IRS employees to resolve their tax issues,” said IRS Commissioner Doug Shulman. “We will host more than 180 open houses this Saturday.”

During the expanded open-house hours on Saturday, taxpayers will be able to address economic hardship issues, make payment arrangements or get help claiming any of the special tax breaks in last year’s American Recovery and Reinvestment Act, including the:

• Homebuyer tax credit - a refundable credit equal to 10 percent of the purchase price up to a maximum of $8,000 ($4,000 if married filing separately). A first-time homebuyer is an individual who, with his or her spouse if married, has not owned any other principal residence for three years prior to the date of purchase of the new principal residence for which the credit is being claimed.

• American Opportunity Credit - a federal education credit to offset part of the cost of college under the new American Opportunity Credit. This credit modifies the existing Hope credit for tax years 2009 and 2010, making it available to a broader range of taxpayers. Income guidelines are expanded and required course materials are added to the list of qualified expenses. Many of those eligible will qualify for the maximum annual credit of $2,500 per student.

• Making Work Pay credit - In 2009 and 2010, the Making Work Pay provision of the American Recovery and Reinvestment Act will provide a refundable tax credit of up to $400 for working individuals and up to $800 for married taxpayers filing joint returns.

• Expanded Earned Income Tax Credit - There is now a new tax classification for EITC recipients who have three or more children and a higher credit amount – up to $5,657.
In addition to IRS help, community organizations partner with the IRS. Volunteer Income Tax Assistance (VITA) programs assist people who earned $49,000 or less, and Tax Counseling for the Elderly (TCE) programs assist individuals 60 and over with their 2009 income tax return preparation and electronic filing. Many of these sites have Saturday hours while others offer assistance at various times during the week. To locate the partner sites in this area call 1-800-906-9887.

In addition to the open houses this Saturday, the IRS will open many of its offices on three additional Saturdays in the spring and early summer.

New health bill a big boom to Outsourcing story in india

US President Barack Obama's $871-billion healthcare reform has brought cheer to Indian healthcare BPO and IT service providers.

Although the reform may not result in heavy healthcare technology outsourcing from the US as it does not talk about any major re-architecturing,re-engineering or system overhauling of the existing platforms it is expected to bring in windfall benefits to domestic BPO providers who are focussed on insurance and claims processing domains.Indian healthcare IT providers mostly focus on systems integration,application management,maintenance and legacy modernisation.
Minneapolis-based healthcare expert Dr Saji Salam said,"All existing IT systems including the electronic medical records,patient information systems and other technology platforms are going to stay untouched,barring some minor to medium tweaking,which will mean some additional work for existing providers like IBM,Accenture and EDS (HP).It's possible that minor portions of these might get shifted to India as well,but the sizable opportunity is for BPOs.''

The reform will bring 32 million poor and emigrant Americans under insurance cover.Insurance firms will look at outsourcing partners to help them enrol new members and process their call and claim needs.

Rising cost pressures will force insurers and hospitals to concentrate only on a few core functions such as benefit and services design,sales and marketing,while outsourcing back-office functions like member database management,claims processing,support services and enrolment processing

The United States passed the most significant piece of social legislation in half a century on a historic Sunday night in a move aimed at providing affordable health care to all Americans and reining in runaway costs.

The landmark transformation in the US health care system,which accounts for one-sixth of the US $13-trillion economy,was clinched in a 219-212 vote in the House of Representatives.No Republican voted for the Bill and 33 Democrats opposed it,but President Obama and the Democratic leadership still managed to get it through with a last-gasp compromise to assuage the more conservative Democratic lawmakers on the abortion issue.

The proposed changes affect every man,woman and child in America.Fundamentally,the new health care legislation brings the US on a par with most European nations by opening the doors of health care to all Americans,in the process adding 32 million citizens to the beneficiaries.It will become compulsory for all Americans (with some rare exceptions) to have health insurance;and insurance companies cannot deny coverage on grounds of pre-existing condition as they can do now.The biggest beneficiaries of the new legislation are the nearly 45 million uninsured who find the massive premiums unaffordable or because insurance companies see them as high-risk and exclude them because they are already deemed too sick.

ON A PAR WITH EUROPE ,Most Americans will now be required to have health insurance or pay a fine t Larger employers will be required to provide coverage or risk financial penalties

The self-employed will get health cover at reasonable costs t Total individual out-of-pocket expenses will be capped and insurers will be barred from denying coverage based on gender or pre-existing conditions.

There is a need for similar legislation in india where in health has become commercial practice and poor / low and middle income group people cannot afford costly bill. Even we have many health insurance providers but looking at their exclusion clause and denial it will be as same as having no insurance cover inspite of paying premium.

The Government of india has to make health as a national subject just like europen countries.

Project work outsourcing

Now a day’s project is part of curriculum where in from your Bachelor's degree till your master’s one need to conduct project and submit the project report to their respective institution.


Project requires the preparation of synapses in some universities like IGNOU where in student is required to submit the brief details of their project and methodology followed in conducting project. Once approved one can get started with the project.


But in case of BBA(Bachelor of business administration) B.com (Bachelor’s of commerce),M.com, MBA where in students will take-up the project based on specialization which may be marketing,finance,HR,Information technology etc…


One main thing involved or purpose of project will be to make the student more practical oriented than a theory worm. So one need to pay utmost attention in project work and understand the practical aspect of the industry.


They can approach companies based on their topics for help in getting the needed resources, data, questionnaire completed. Originality of the project is very crucial and one cannot submit the project which is prepared by some other student and submitted for obtaining degree or master degree.


Timeline is very crucial for project as it may range between 3 to 6 months and initial phase one will be spending most of their time in data collection, understanding the working of an organization relevant to their project topic.


Choosing project topic is very crucial as the whole project revolve around the same.


Summary of your recommendations and suggestions will be the main crux of your project. Here you have to explain your inference on your project. Data collection and interpreting data is very crucial.


If someone need guidance relating to project work, choosing topic ,data collection help and finalizing the project feel free to mail (project.kumar79@gmail.com) or call me back.(09902977233)

Boom for IT started again... Recession over????

New Delhi: An IIM-Kolkata student bagged an annual pay package of Rs 1.6 crore. Jobs are back as the economy shows sure signs of getting back on track.

The class of 2010 are looking at a revved up job market. But what are the lessons learnt from the recession. Should students look less at the big paying, high profile investment-banking firms?
Should they prefer the stable, more solid companies? Are students in the post-slowdown scenario preferring to turn entrepreneurs? What are experts recommending - higher salaries or company profile?

Indian Institute of Management students are relieved that the worst of the downturn appears to be behind them and green shoots are certainly visible. It's been a bumper placement season for them this year. In just five days, all students at IIMs have got placed. Average salaries are also much higher than last year.

Rs 1.6 crore is the annual pay package offered to an IIM Kolkata graduate by a global investment bank. Two others will be joining investment banks in London with a Rs 1 crore pay package. The good news across business school campuses is that jobs are back. At IIM Lucknow, 60 per cent offers came from IT companies.

Infosys Technologies, India's No. 2 software services exporter, is seeing a rise in outsourcing deal flows due to a recovery in the global economy, a top official said on Wednesday

Infosys and its rivals such as Tata Consultancy Services and Wipro had seen a sharp drop in demand for outsourcing services and pressure on prices a year ago, as recession crimped investments on IT services by their clients.

Mid-tier software services firm MphasiS is planning salary hikes for its employees from May this year. The hikes will be decent, Ganesh Ayyer, chief executive officer, MphasiS, said without disclosing more details.

Last year, the company had suggested a one-time bonus as a recompense bonus in order to ensure more variability in its employee wage bill and align it with the company’s performance. This year, however, it reversed the decision and has decided to go for regular salary hikes. The bonus that was announced last year should continue till April 15 and the hikes would roll out in May, Ayyer said.

Changes to 1040 for this year...2010 - 2009 form 1040

Tax preparers will find the following section-by-section, line-by-line look at key tax law changes on the 2009 Form 1040 a great start to understanding how the rules have changed. (For a rundown of new rules and regulations that may impact your client's 2009 returns, see the accompanying story, New Rulings Impact 2009 Form 1040.)

Filing Status and Exemptions
The changes on Form 1040 start at the top, with a revised definition of a qualifying child dependent [Code Sec. 152(c)]. The revised rules apply both for dependency exemption purposes as well as for purposes of qualifying for head of household filing status.

In addition, a noncustodial parent claiming an exemption for a child can no longer attach pages from a divorce decree or separation agreement executed after 2008 to back up the claim. The noncustodial parent must attach Form 8332, Release/Revocation of Release of Claim to Exemption for Child by Custodial Parent, or a similar statement signed by the custodial parent releasing the claim to the exemption.

Income
Line 7, Wages, salaries, tips, etc. Military differential payments made after 2008 to former employees while they are on active duty for more than 30 days in the Armed Forces or other uniformed are now treated as wages [Code Sec. 3401(h)]. These payments should be included in box 1 of Form W-2.

Line 19, Unemployment compensation. As a general rule, gross income includes any unemployment compensation benefits received under the laws of the United States or any state. However, for 2009 only, the first $2,400 of unemployment compensation benefits received are excluded from gross income by the recipient [Code Sec. 85(c)].

Line 20, Social Security benefits. During 2009, Social Security recipients received a bonus in the form of a $250 economic recovery payment [2009 ARRA §2201]. The economic recovery payment is tax free and should not be included in income. Moreover, although the payment was made by the Social Security Administration, it should not be included in the amount of Social Security benefits on Line 20a. However, in the case of a working senior, the economic recovery payment will reduce the amount of the Making Work Pay credit otherwise allowable (see below).

Tax and Credits

Line 40, Itemized deductions or standard deduction.

Standard Deductions. As was the case in 2008, taxpayers claiming the standard deduction are entitled to additional standard deduction amounts for real estate tax payments or disaster losses. The additional real property tax deduction can be claimed for up to $500 ($1,000 for married couples filing jointly) of real estate taxes of the type that would be allowable as itemized deduction [Code Sec. 63(c)(7)] . The disaster loss deduction is equal to the difference between personal casualty losses and personal casualty gains attributable to a federally declared disaster [Code Sec. 63(c)(8)].

Also, for 2009, eligible taxpayers can claim an additional standard deduction amount for new motor vehicle taxes [Code Sec. 63(c)(9)] The deduction is limited to the tax on up to $49,500 of the purchase price of a qualified motor vehicle, subject to a phase-out for higher-income taxpayers.

Taxpayers claiming an additional standard deduction amount must check the box on Line 40b and complete the following:

NEW SCHEDULE L. Ironically, with the growing number of "add-ons," the standard deduction, which was intended to provide simplicity, has become nearly as complex as itemizing deductions. Taxpayers claiming any of the additional standard deduction amounts must complete new Schedule L, Standard Deduction for Certain Filers. At 21 lines, the new schedule is only slightly shorter than 30-line Schedule A for itemizers. In addition, taxpayers claiming any additional standard deduction amounts cannot use simplified Form 1040-EZ.
Itemized Deductions. The new motor vehicle sales tax deduction also shows up as a new entry (Line 7) on Schedule A, Itemized Deductions, along with an accompanying worksheet. The itemized deduction for motor vehicle sales taxes is subject to the same rules and limitations as the standard deduction add-on.

Taxpayers claiming personal casualty or theft losses on Line 20 of Schedule A face some new rules. For 2009, the per-casualty deduction floor is increased from $100 to $500 [Code Sec. 165(h)(1)]. In addition, net disaster losses are deductible without regard to whether aggregate net casualty losses exceed 10% of adjusted gross income (AGI) [Code Sec. 165(h)(3)]. For purposes of applying the 10% limitation to other personal casualty or theft losses, losses deductible as a disaster loss are ignored. This has the effect of treating net disaster losses as a deduction separate from all other non-disaster casualty and theft losses. These deductions are computed on a revised version of Form 4684, Casualties and Thefts.

Line 45, Alternative minimum tax. ARRA increased the individual AMT exemption amounts for tax years beginning in 2009 to (1) $70,950, in the case of married individuals filing a joint return and surviving spouses; (2) $46,700 in the case of other unmarried individuals; and, (3) $35,475 in the case of married individuals filing separate returns [Code Sec. 55]. Also for tax years beginning in 2009, ARRA allows an individual to offset the entire regular tax liability and alternative minimum tax liability by nonrefundable personal credits.

Line 49, Education credits. For 2009, a modified version of the Hope Scholarship credit (aka the American Opportunity credit) may be claimed for expenses paid for any of the first four years of a student's post-secondary education [Code Sec. 25A]. The maximum credit is $2,500 per eligible student (100% of the first $2,000 of qualified expenses and 25% of the next $2,000 of qualified expenses, subject to a phase-out for higher income taxpayers. For 2009, the definition of qualified expenses is expanded to include course materials in addition to tuition and fees. Up to 40% of the otherwise allowable credit is refundable (unless the taxpayer claiming the credit is subject to the "kiddie tax"). The modified credit is calculated on a revised version of Form 8863, Education Credits (American Opportunity, Hope, and Lifetime Learning Credits).

Lines 52 and 53, Other credits. A number of new or improved energy-related tax credits can be claimed for 2009. These include

The nonbusiness energy property credit (Form 5695) [Code Sec. 25C].
The residential energy efficient property credit (Form 5695)[Code Sec. 25D].
The credit for qualified plug-in electric vehicles (Form 8834) [Code Sec. 30].
The alternative motor vehicle credit (Form 8910) [Code Sec. 30B].
The alternative fuel vehicle refueling property credit (Form 8911) [Code Sec. 30C].
The credit for new qualified plug-in electric drive motor vehicles (Form 8936) [Code Sec. 30D].
The plug-in conversion credit (Form 8910) [Code Sec. 30B].
These credits are computed on the appropriate forms and entered on Lines 52 and 53 of Form 1040.

Other Taxes

Line 60, Total tax. Taxpayers frequently must add additional taxes to the income tax computed in the Tax and Credit section of the forms. Some of these taxes, like self-employment tax, have separate lines on Form 1040, but others must be computed off the form and included in the total tax on Line 60.

For 2009, some higher-income taxpayers who received the new COBRA premium subsidy must recapture all or part of the subsidy as an additional tax. Eligible individuals who became entitled to COBRA coverage during 2009 because of an involuntary termination of employment received the subsidy in the form of a 65% reduction in the otherwise required premium for health care continuation coverage. However, a recapture rule applies for taxpayer's with modified AGI above $125,000 ($250,000 for joint return filers). The full amount of the subsidy is recaptured for taxpayers with modified AGI of more than $145,000 ($290,000 for joint filers). The recapture amount should be entered on the dotted line next to Line 60 and identified as COBRA. The amount should be included in the total tax entered on Line 60.

Any recapture of the new first-time homebuyer credit is also included in the total tax on Line 60 (see also Line 67 below).

Payments

Line 63, Making work pay and government retiree credits. While most wage earners received the benefit of the Making Work Pay credit through reduced withholding during the year, all eligible taxpayers will still have to compute the credit on their 2009 returns. The credit is the lesser of (1) 6.2% of an individual's earned income or (2) $400 ($800 in the case of a joint return). The credit is phased out when AGI is more than $75,000 ($150,000 for joint filers). Here again, the 2009 Form 1040 contains something new.

NEW SCHEDULE M. This new page-long form is used to calculate the Making Work Pay credit, which is then entered as a payment on Line 63 of Form 1040.
Certain payments and credits for government retirees reduce the Making Work Pay credit. These reductions are calculated on Schedule M.

Line 64, Earned income credit. ARRA increased the EITC credit percentage for families with three or more qualifying children to 45% for 2009 and 2010 [Code Sec. 32]. Thus, for 2009 taxpayers with three or more qualifying children may claim a credit of 45% percent of earnings up to $12,570, resulting in a maximum credit of $5,656.50. The Act also increased the threshold phase-out amounts for married couples filing joint returns to $5,000 above the threshold phase-out amounts for other filers for 2009 and 2010. For 2009, the maximum credit of $3,043 for one qualifying child is available to joint filers with earnings between $8,950 and $21,420. The credit begins to phase down for joint filers at a rate of 15.98% earnings above $21,420. The credit is phased down to $0 at earnings of $40,463.

Line 65, Additional child tax credit. To the extent the child credit (Line 51) exceeds a taxpayer's tax liability, the taxpayer is eligible for a refundable credit (the additional child tax credit). As a general rule, the refundable credit is calculated using the earned income formula, under which the refundable credit is equal to 15% of earned income in excess of a threshold dollar amount. The threshold dollar amount is indexed for inflation. The threshold dollar amount for 2009 was originally set at $12,550 for 2009, but was reduced to $3,000 by the American Recovery and Reinvestment Act [Code Sec. 24]. The additional child credit is treated as a payment of tax on Line 65 of Form 1040.

Line 66, Refundable education credit. This line is used to claim the refundable portion of the American Opportunity credit (see Line 49 above). The refundable portion of the credit is calculated on revised Form 8863.

Line 67, First-time homebuyer credit. Last, but far from least, taxpayers who purchased a new home during 2009 may be eligible for a first-time homebuyer credit [Code Sec. 36]. The maximum credit amount is $8,000 ($4,000 for a married individual filing separately) for homes purchased after December 31, 2008, and before December 1, 2009. The credit phases out for individual taxpayers with modified adjusted gross income between $75,000 and $95,000 ($150,000 and $170,000 for joint filers) for the year of purchase. The credit is refundable and is treated as a payment of tax on Line 67 of the 2009 Form 1040. Note, however, that a taxpayer may elect to treat a home purchased in the eligible period in 2009 as if purchased on December 31, 2008, for purposes of claiming the credit on the 2008 tax return. The first time homebuyer credit is calculated on a revised version of Form 5405, First-Time Homebuyer Credit and Repayment of the Credit.

As its name implies, Form 5405 is also used to calculate recapture of a first-time homebuyer credit claimed for 2008. For homes purchased in 2008, recapture is required ratably over 15 years beginning with the second year taxable year after the year the home was purchased. Consequently, ratable recapture won't kick in until 2010. However, recapture is also required if the home is sold or otherwise ceases to be the principal residence of the taxpayer within 36 months from the date of purchase. Any repayment amount is entered as an additional tax on Line 60 of Form 1040 with the caption "FTHCR" entered on the dotted line.

Note: Ratable recapture does not apply to homes purchased in 2009; however, recapture is required if the home is sold or ceases to be a principal residence within 36 months of purchase.

Refund
As in prior years, taxpayers can direct that all or part of a tax refund be directly deposited to a checking or savings account or to a TreasuryDirect® online account to buy U.S. Treasury marketable securities and savings bonds. Starting with the 2009 return, taxpayers can use a refund to buy up to $5,000 of U.S. Series I Savings Bonds without setting up a TreasuryDirect® account. Amounts requested must be in multiples of $50.

IRS to regulate paid tax preparation

The Internal Revenue Service plans to test, register and screen people who get paid to prepare tax returns, stepping into a virtually unregulated business on which millions of Americans depend for crucial financial services.

The agency wants to crack down on preparers who do shoddy or fraudulent work and create a way for consumers to make more informed choices -- though the moves could increase the cost of having tax returns prepared.

"In most states you need a license to cut someone's hair," but today "most tax-return preparers don't have to meet any standards when they sit down and prepare a federal tax return for an American taxpayer," IRS Commissioner Douglas Shulman said in an interview Monday.

The agency said it will phase in the changes with the 2011 tax season.

The announcement underscores the fact that helping Americans comply with the federal tax code has become a big business. The industry is a sprawling one, taking in brand-name national players such as H&R Block and Jackson Hewitt, mom-and-pop practitioners who hang out their shingles each tax season, and fly-by-night operators who can leave taxpayers on their own when the IRS finds fault with their returns.


The IRS estimates that 900,000 to 1.2 million people prepare tax returns for a fee, and many do so without ever being officially tested.

"Right now, the IRS doesn't know who unregulated preparers are and can't track them when there's a problem. This ultimately hurts the taxpayers who end up having to pay more taxes, fines and penalties," Sen. Charles E. Grassley (R-Iowa), who presided over a hearing on the issue years ago, said in a statement.

Starting with the 2011 tax season, the IRS plans to require paid preparers to register with the agency. Subsequently -- the timeline is not yet firm -- they will be required to pass competency tests and receive continuing professional education.

The IRS said it will screen preparers to make sure they have paid their own taxes.

In a report issued Monday, the agency also raised concerns about the quality of tax-preparation software and about the marketing of loans backed by expected returns.

Last year, almost 94 million returns were completed using tax software. Both taxpayers and professional preparers relied on the programs, though "quality control over these products rests exclusively with the software publishers," the IRS said.

Meanwhile, some preparers encourage consumers to take out loans against anticipated refunds, without fully explaining the costs, the agency said.

Source:

Dubai crisis impact on Indian economy

Economic growth in the United Arab Emirates is set to disappoint next year, with Dubai debt woes expected to boost credit costs as investors can no longer count on implicit government support for indebted state companies.

The global credit crunch sent the top Gulf Arab economies -- Saudi Arabia and the UAE -- into downturn this year, but high state spending and a turnaround in oil prices were seen helping the world's top-oil producing region to get back on its feet.

The UAE's prospects have dimmed, however, now that Dubai, which had once enjoyed stellar property-fuelled growth, has asked for a repayment freeze on billions of dollars worth of debt issued by its key state-owned construction firms.

Exports are going to be the most affected by Dubai woes, as the UAE region is now India's largest export destination toppling the United States.

Besides, bullion trading in Dubai is likely to be impacted, which may have ripple effect for India as around USD 29 billion of gold from the country is being traded in Dubai.

However, the silverline to this whole scenario is that the ongoing crisis would only impact the Dubai's economy, and countries such as Abu Dhabi is likely to remain on a firm keel in comparison and this should help mitigate the damage to India's exports to the UAE, the report added.
On November 25, the Dubai government had announced the restructuring of Dubai World, and asked all providers of financing for the company and Nakheel to "stand still" and extend maturities until at least May 30, 2010.

Trip cost to Dubai has fallen by 40% due to economic downturn.

Reason for dubai crisis:

The company ia a classic example of huge borrowing beyond its means. In short, the company borrowed a huge amount from banks to finance its various projects during the 2005-08 boom period but failed to come up with a repayment plan. The global crisis of 2008 triggered the crisis and it never recovered from the blow. Dubai accumulated $80 billion of debt by expanding in banking, real estate and transportation before the financial markets were hit by the global crisis. Dubai World accounts for $59 billion of these liabilities and it doesn’t have money to repay this debt. Dubai suffered the world’s steepest property slump in the global credit crisis as home prices fell 50 per cent from their 2008 peak.

Indian banks have informed the Reserve Bank of India that their loan books in Dubai are insignificant compared to their total turnover. The reports are part of the information that RBI has called for from the banks to evaluate their exposure to Dubai World, the city state’s investment company which has asked for a “standstill” on debt repayment till May 2010.
The combined exposure of SBI, BOB, and ICICI Bank as per their estimates on Friday stood at less than Rs 7,000 crore. “Our exposure to the UAE is less than Rs 1,500-crore, which is below 0.3 per cent of the total loan-book of the bank”, said an official of State Bank of India. The loans to Dubai-based clients is largely in the form of short-term loans, which will be repaid in 3-6 months time, he said.

ICICI Bank, also said the bank did not have any significant exposure to Dubai corporates. “ICICI has no material, non-India linked exposure to Dubai corporates,” its spokesperson said.
Out of the Bank of Baroda’s global loan-book of Rs 1,50,000 crore, that for the UAE region is Rs 10,000 crore. Dubai accounted for half of that at Rs 4,000 crore, said CMD MD Mallya. “The bank has only a 7-8 per cent of the total loan-book exposure to the Gulf region. These accounts are well maintained and are unlikely to cause any kind of impact on the balance-sheet,” he said. Bank of Baroda’s total exposure to real estate projects in UAE is even less at Rs 600 crore. Mallya said all the projects are well diversified ones and are performing well.