OVERCHARGES CHARGES & TAXES IN RESTAURANTS

It is Sunday evening. You are in a restaurant. You had nice full course dinner with soup, main course, followed by dessert. You checked the prices before and ordered. However, when the bill came, you were little shocked. The numbers did not match till you came across few items called service tax and service charge which inflated the bill by about 15% to 20%. Since this is Sunday evening and you have been waiting for this for the whole week, you don’t question it and pay. We have all faced this situation in fine dining and not so fine dining restaurant. Almost all of us agree that the extra cost is high but none of us know the charges and taxes included in bill.
 

A simple thing made complicated
 

We have an uncanny ability to screw simple things and make it complex. Taxes and charges on seemingly simple stuffs like food and drinks are one such thing where customers are taken for granted. Let’s understand few terms that we see on our food bill often but do not understand.

Service charge
 

This is charged by the restaurant for the services rendered to you. This money goes to the restaurant. The establishments are free to charge any amount as service charges as there are no guidelines provided by the tax authority. The charge varies from 5% to 10%. Few restaurants don’t charge it. This is equivalent to the tips people usually give to waiters. If you are charged service charge in the bill, don’t pay tips as this charge is supposed to be shared among the staff.
 

Most of us don’t bother about it even when we feel the charges are higher. One reason is that we don’t think anything can be done about it. Secondly, we don’t want to spoil our evening because of this and argue with restaurant manager. However, the ground rule is that if the menu mentions service charges, you have to pay. If it doesn’t, you can question it.
 

Service tax
 

Many people confuse service tax with service charges. Service tax is the tax levied by the Government on the services rendered by restaurants. Service tax is same in all states. It is 12.36% on the 40% of the bill. The bill includes your food and drink and the service charge. The restaurant must be air-conditioned for the service tax. The problem here is that most of the customers are taxed at the full bill and not on the 40% of the bill as directed.
 

To make things simple, service tax should be 40% * 12.36% = 4.94% on the total bill. Hence whenever you see service tax on the total bill exceeding about 5%, you can question it.

VAT (Value Added Tax)
 

There is another tax called VAT (value added tax) that is state specific. The rates can be as low as 5% and as high as 20% depending upon the states. Moreover, VAT for food items and drink are different. Many restaurants might club food items and drink and charge a flat rate on the total bill. In such cases, it is good to ask for separate bills for food and drinks. This should clearly show the different VAT for both the items.
Example
 

Let’s see how service charge, tax and VAT work with an example. Suppose you have dined in an AC restaurant and the price of food items is summed to Rs 900. You will be asked to pay service charges (goes to the restaurant) and VAT and service tax (goes to Government)

Items    Amount
Bill of food item    9000
Service charge (assuming 6%)    540
Sun Total    9540
Service tax to be levied on (40% of sub-total)    3816.0
Service tax (at the rate of 12.36%)    471.6576
VAT @ 12.5% of the sub-total    1192.5
Total amount to be paid    11204.16

Many times, restaurants charge the highest rate on the total bill. This is general complaint by almost all the customers. Many of the times, we cannot do anything about overcharging. The reasons are not only our unwillingness but also the ignorance of restaurant managers. In many cases though, you can question these items and get your bill corrected. Please remember that this will not be easy. However, you can always question and explain this to the restaurant manager and get your bill corrected. There have been cases where customers were able to reduce their bill.

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Hope the information will assist you in your Professional endeavors. For query or help, contact:   info@carajput.com or call at 011-43520194
 

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Manner of Appointment of Statutory Auditors and Payment of Remuneration

i. Procedure to appoint Statutory Auditors in the case of Companies not having an Audit Committee
a. An Auditor matching his qualification and experience with the size and requirements of the Company shall be chosen by the Board.
b. The Board shall then see whether there are any orders or pending proceedings relating to professional matters of conduct against the proposed Auditor before ICAI or any other competent Authority.
c. The Board has to see whether he satisfies the eligibility norms specified under Section 141.
d. The Board has to obtain a declaration from the Auditor that he is eligible to issue a certificate under rule 4(1).
Note: As per Rule 4(1), the Company has to get the eligibility certificate after the Auditor is appointed in the AGM. What if the management finds out if the Auditor is ineligible to issue the certificate after he is appointed? The Board should then take the pains to identify a new Auditor in replacement of the appointed Auditor. To avoid such a scenario, it is suggested that clause (d) be followed.
e. The Board has to finalize the remuneration payable to the Auditor in consultation with him and pass the resolution in the Board subject to the approval of the shareholders in the Annual General Meeting. Section 142 requires the Company to quantify the remuneration in the General Meeting.
Note: Under the Companies Act, 1956, The Company had the privilege to appoint Auditors in the AGMs on a remuneration that could be decided by the Board at a later date. That era is over.
f. With the Board’s consent on the Appointment as well as on the remuneration, the intended resolution to be passed could be mentioned in the AGM NOTICE itself. Here is the model resolution.
“Resolved that in accordance with the provisions of Section 139, 141 and 142 of the Companies Act, 2013 read with rule 3(7) of the Companies (Audit and Auditor) Rules, 2014, M/s.ABC & Co, Chartered Accountants, Bangalore be and are hereby appointed as Statutory Auditors of the Company so as to hold the said office from the conclusion of this meeting till the conclusion of the sixth Annual General Meeting on a consolidated remuneration of Rs.22,000 (Rupees twenty two thousand four hundred and seventy two only) for each Audit period unless otherwise revised subsequently at the time of ratifications in the subsequent Annual General Meetings”. for more information: Book keeping services
“Resolved further that M/s ABC & Co, Chartered Accountants, Bangalore shall in addition to the above remuneration be eligible to reimbursement of all expenses incurred during the course of Audit and availing   all such facilities as are extended to them during Audit”.
g. The Company shall file an E Form in ADT–1 intimating the Registrar about the appointment of Auditors within 15 days from the date of his appointment
h. The Company shall also inform the Auditors about his appointment in the AGM within 15 days of his appointment.
ii. Procedure to appoint Auditors in the case of Companies having an Audit Committee
i.    Instead of the Board, the Audit Committee has to go through the process of selection of Auditors as mentioned in Clause (a) to (e) and then recommend to the Board which in turn recommends to the Members for consideration in the AGM.
ii.    a. If the Board disagrees the recommendation of the Audit committee, it shall refer back again to the said Committee citing reason for disagreement and recommending reconsideration.
b. If the Audit committee decides not to reconsider the recommendations made by the Board, the Board shall then record the reason for disagreement and send its own recommendations for consideration to the members to decide in the Annual General Meeting.
3. Conditions and Eligibility Criteria for Appointment of Auditors
The Auditor appointed by the Members or by the Board as the case may be, shall submit a certificate stating that
i. He is eligible for appointment and is not disqualified for appointment under the Companies Act, 2013, the chartered Accountants Act, 1949 and the rules and regulations made there under.
ii. The proposed appointment is asper the terms provided under the Act.
Note: Section 141 and rule 10 list out the eligibility criteria for the Auditors and Section 144 list out services that he should not render either directly or indirectly while serving as Auditor
iii. The proposed appointment is within the specified limits laid under the Act.
iv. The list of proceedings against the Auditor or Audit firm or any partner of the Audit firm pending with respect to professional matters of conduct as disclosed in the certificate is true and correct.
4. Filling up of Casual Vacancy caused due to various reasons in the case of Companies not subject to Audit by the Comptroller and Auditor General of India
a. In the case of casual vacancy caused by the resignation of the Auditor, the following procedures have to be      followed.
i. The Board of Directors shall approve the filling up the casual vacancy within thirty days and then recommend such appointments to the members.
ii. The members in an Extra Ordinary General Meeting shall confirm and approve the vacancy filled up by the Board on its recommendations within three months.
b. In the case of casual vacancy caused by any other reason other than resignation of the Auditor, the Board of Directors has the powers to fill such a vacancy within thirty days.
c. In the case of Companies having Audit Committee, filling up of casual vacancy shall be done after taking into account the recommendation of such a Committee in addition to the recommendation of the Board.
The Appointed Auditor shall hold office till the conclusion of the next Annual General Meeting
5. Filling up of Casual Vacancy in the case of Companies subject to Audit by the Auditor Controller General of India
i. The Comptroller and Auditor General of India shall fill up the casual vacancy within thirty days.
ii. In case the casual vacancy is not filled as mentioned in (i) above, the Board of Directors shall fill such vacancy within the next 30 days.
6. Reappointment of either the retiring Auditor or some other Auditor in the place of the retiring Auditor.
As per Section 139(9) of the Act, the retiring Auditor shall be reappointed at an Annual General Meeting if
i. He is not disqualified for reappointment
ii. He has not given the company a notice of unwillingness to be reappointed.
iii. A special resolution is passed at the Annual General Meeting appointing some other Auditor or providing expressly that he shall not be reappointed.
iv. The retiring Auditor shall continue to remain as Auditor till the end of this term viz., conclusion of the sixth Annual General Meeting if no other auditor is appointed or reappointed.
Note: This is contrary to rule 3(7) as mentioned earlier.
7. Services to be rendered by the Statutory Auditor
i. The Auditor shall conduct the Statutory Audit the manner in which it is laid down under Section 143.
ii. The Auditor in his report shall specify all matters as are enumerated in Section 143 and Rule 11.
iii. In case of frauds, the Auditor shall report in the manner laid under Rule 13.
iv. Section 146 requires the Auditor to attend either by himself or through his authorized representative who shall be qualified to be an Auditor all general meetings and he shall have the right to be heard on any part of business that concerns him. (However the Company may exempt the Auditor in complying with this provision)
8. Services not to be rendered in the capacity as Statutory Auditor
The Auditor shall not render either directly or indirectly to the Company, or its Holding or Subsidiary Company the following services.
a. Accounting and Book keeping service.
b. Internal Audit
c. Design and Development of any financial information system
d. Actuarial Services
e. Investment advisory services
f. Investment Banking Services
g. Rendering of outsourced financial services
h. Management Services
Any other services as may be prescribed by the Government.
9. Restrictions on Term of Office that a Statutory Auditor can hold applicable only to certain class of Companies
The term of office of an Individual Auditor shall be for five years and for a firm of Auditors shall be for two consecutive terms of five years for the following classes of Companies.
a.    All listed Companies
b.    All unlisted Public Companies having a share Capital of Rs.10 Crores or more.
c.    All Private Companies having a capital of more than Rs.20 Crores
d.    All Companies not falling under clause (b) and (c) but having Public borrowings from financial institutions, banks or Public deposits of Rs.50 Crores or more.
However the Act has given time to comply with the above provisions by the aforesaid companies within a period of three years viz., on or before 31–3–2017.

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COMPLETE PROCEDURE OF REVISE E TDS RETURN

If an assessee has filed his income tax return and subsequently found any omission or wrong statement therein, he can re-file/revise the return with necessary modification. This re-filing of the income tax return is referred to as Revised Return. The process for revising the return is very simple. Please remember that the process outlined below is applicable if you had filed the original return online.

RULES RELATED TO REVISED RETURN
•    Revised return can be filed for any previous year at any time before the expiry of 1 year from the end of the relevant assessment year or before completion of the assessment whichever is earlier. For this financial year 2013-14), you can file the revised return till March 31st, 2014
•    However, if the income tax department completes the assessment of your return earlier, then a revised return cannot be filed.
•    Revised return can be filed only if the original return was filed before due date. Thus if a return is filed after a due date then it cannot be revised
•    A loss return filed within time can also be revised and in such case loss as per the revised is carried forward
•    One should have acknowledgement number and date of filing the original return in order to file a revised return
•    Return filed in response to the notice u/s 148 can also be revised. It should be noted that notice u/s 148 is issued in respect of the escaped income in the respective assessment year
•    In case of concealment of income and furnishing of inaccurate information in income tax return an individual will be penalized
HOW TO FILE A REVISED RETURN
•    Check for the discrepancy in ITR-V form received from the original return e-filing.
•    Log on to h t t p s: // i n c o m e t a x i n d i a e f i l i n g . g o v .i n /
•    In the home page, Login through link of Registered Users.
•    Prepare & Submit online Return under e-file & complete below detail as required.
•    Enter the E-filing acknowledgement receipt number from the ITR-V (Which you got after the original return)
•    Select the appropriate “return filed under section”. You will find options for 17-Revised 139(5).
•    Press Save as Draft and continue and go ahead make changes and enter correct details
•    Press Submit button on completion of data . You will get a new ITR-V marked as revised return.
•    Once you receive the ITR-V form, you are supposed to send across both original and revised return ITR-V forms to IT department Bangalore within 120 days.

Know more about information: TDS Return and Service tax registration

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Analysis of Some Relevant Sections UNDER INCOME TAX With Regard to Transfer of Immovable Property

Existing Section 50C: Section 50C affects all the transactions of land and buildings in the country except Jammu and Kashmir. This section comes into picture at the time of computing capital gains under section 48 of the Income Tax Act, 1961. Section 50C provides that if the value stated in the instrument of transfer is less than the valuation adopted, assessed or assessable by the stamp duty authorities, the valuation as adopted, assessed or assessable by the stamp duty authorities will be considered for the purpose of computation of capital gains arising on transfer of land or building or both. Income tax consultants

For example: If in the agreement for sale, the value of the flat is stated at Rs. 24 lacs but according to the stamp duty authorities the valuation of the flat is Rs. 34 lacs, then it will be considered that the flat has been sold for Rs. 34 lacs and capital gains will be computed on the basis of Rs. 34 lacs.

Section 50C is applicable only to transfer of land or building or both provided it is a  capital asset. Thus, in cases when such assets are held as stock-in-trade, the section does not apply. By implication, it does not affect sale of land or building by a builder or a developer because land, building, shops, flats, etc sold by the builders and developers are generally stock-in-trade in their hands and not the capital assets.

Last few statements in bold letters acts as a platform for the insertion of new section 43CA

New Section 43CA(With effect from 1st April, 2013): A new section 43CA has been
inserted by the Finance Act, 2013 which provides stamp duty value to be considered for the purpose of computation of income under the head "Profits and Gains of Business or Profession" in respect of all transactions relating to land or building or both. This amendment has an adverse impact on almost all transactions of real estate entered into by all real estate developers and traders in India because their income would be computed on the basis of  notional income and not the real income as appearing in the books of account of a tax payer.

Exception to Section 43CA:
•    Sale consideration is received in a mode other than cash.
•    Sale consideration is received on or before the date of agreement of transfer.
•    The date of an agreement fixing the value of consideration for the transfer of the
•    asset and the date of registration of the transfer of the asset are not the same.

When the above three conditions are satisfied, the stamp duty value may be taken as on the date of the agreement for transfer and not as on the date of registration for such transfer.

Section 56(2)(vii):

Existing Law: Where any immovable property is received by an individual or HUF without consideration, the stamp duty value of which exceeds fifty thousand rupees, the stamp duty value of such property would be charged to tax in the hands of the individual or HUF as income from other sources. It is further stated that the existing provision does not cover a situation where the immovable property has been received by an individual or HUF for inadequate consideration.

As amended by the Finance Act, 2013: The provisions of clause (vii) of sub-section (2) of section 56 is amended so as to provide that where any immovable property is received for a consideration which is less than the stamp duty value of the property by an amount exceeding fifty thousand rupees, the stamp duty value of such property as exceeds such consideration, shall be chargeable to tax in the hands of the individual or HUF as income from other sources.

Exception to Section 56(2)(vii):

•    Sale consideration is received in a mode other than cash.
•    Sale consideration is received on or before the date of agreement of transfer.
•    The date of an agreement fixing the value of consideration for the transfer of the
•    asset and the date of registration of the transfer of the asset are not the same.

When the above three conditions are satisfied, the stamp duty value may be taken as on the date of the agreement for transfer and not as on the date of registration for such transfer.

Section 194IA: A new section 194IA has been inserted by Finance Act, 2013 so as to
provide that every transferee, at the time of making payment or crediting of any sum as consideration for transfer of immovable property (other than agricultural land) to a resident transferor, shall deduct tax, at the rate of 1% of such sum only if the purchase value of immovable property is in excess of Rs.50 Lakhs. Consequent to this insertion, the tax payers would be required to obtain TAN (Tax Deduction Account Number) Number and also perhaps would be required to file the yearly TDS return(With effect from 1/6/2013).

Section 80EE (Inserted by Finance Act, 2013): Helpful for individuals having total income
beyond Rs. 6 lacs:
•    Lender is a bank or public financial institution.
•    Loan sanctioned between 1/4/2013 to 1/4/2014.
•    Loan is for acquisition or construction of a new house.
•    On the date of sanction of loan he should not own any residential property. Loan amount is less than or equal to Rs. 25 lacs.
•    Value of residential property is less than or equal to Rs. 40 lacs. Only interest paid is allowed up to Rs. 1 lac. in the year I. If less than Rs 1 lac. is claimed in the I year, then the balance amount can be claimed in the year II. Maximum Rs 1 lac deduction can be claimed in the 2 year spread.

 Know more about information: TDS consultants and Business set up in India

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METHODS OF ELIMINATING DOUBLE TAXATION

The objective of double taxation can be achieved Tax treaties employ various methods or a combination of
(I) EXEMPTION METHOD –

One method of avoiding double taxation is for the residence country to altogether exclude foreign income from its tax base. The country of source is then given exclusive right to tax such incomes. This is known as complete exemption method and is sometimes followed in respect of profits attributable to foreign permanent establishments or income from immovable property. Indian tax treaties with Denmark, Norway and Sweden embody with respect to certain incomes.

(II) CREDIT METHOD

This method reflects the underline concept that the resident remains liable in the country of residence on its global income, however as far the quantum of tax liabilities is concerned credit for tax paid in the source country is given by the residence country against its domestic tax as if the foreign tax were paid to the country of residence itself.

(III) TAX SPARING

One of the aims of the Indian Double Taxation Avoidance Agreements is to stimulate foreign investment flows in India from foreign developed countries. One way to achieve this aim is to let the investor to preserve to himself/itself benefits of tax incentives available in India for such investments. This is done through “Tax Sparing”. Here the tax credit is allowed by the country of its residence, not only in respect of taxes actually paid by it in India but also in respect of those taxes India forgoes due to its fiscal incentive provisions under the Indian Income Tax Act.

Thus, tax sparing credit is an extension of the normal and regular tax credit to taxes that are spared by the source country i.e. forgiven or reduced due to rebates with the intention of providing incentives for investments.

The regular tax credit is a measure for prevention of double taxation, but the tax sparing credit extends the relief granted by the source country to the investor in the residence country by the way of an incentive to stimulate foreign investment flows and does not seek reciprocal arrangements by the developing countries.

APPLICABILITY OF TREATY BENEFITS

In order to get the benefit of a tax treaty, it is necessary to have an access to it. For that purpose, a person must qualify in terms of the treaty as a: 

- person 

- resident of any of the Contracting states; and 

- beneficial owner of the income by the way of dividends, interest or royalties for a lower rate of withholding tax.

RESIDENCE OF A PERSON/ RESIDENT

The determination of the residential status is of great significance as the taxability of income under the domestic laws depends upon it, and as also only the resident of a contracting state can seek relief from double taxation.

The expression ‘resident of contracting state’ is defined to mean any person who, under the laws of that state, is 

1. liable to tax therein by reason of 

2. domicile, residence, place of management or 

3. any other criterion of a similar nature.

The treaty provisions set forth rules for determination whether a person is a resident of a contracting state for purposes of the treaty. The determination looks for first to a person’s liability to tax as a resident under the respective taxation laws of the contracting state. If a person is resident in both the contracting states, there are provisions to assign a single state of residence to him for purposes of the treaty through tie-breaking rules.

BUSINESS INCOME

The business income of a non-resident is taxable in India under section 9(1)(i) of the ITA only if it accrues or arises, directly or indirectly, through or from any business connection in India, property in India, asset or source of income in India, or through the transfer of an Indian capital asset. Explanation 2 of section 9(1) (i) contain an inclusive definition of business connection; as per which a business connection is said to exist if any person carrying on a business activity acts on behalf of a non-resident and:
# has and habitually exercises an authority to conclude contracts on behalf of the non-resident 

# has no such authority, but habitually maintains in India a stock of goods or merchandise from which he regularly delivers goods or merchandise on behalf of the non-resident 

# habitually secures orders in India, mainly or wholly for the non-resident or its affiliates.

PERMANENT ESTABLISHMENT

Double taxation agreement restricts the jurisdiction of the contracting states to taxing business income of a foreign enterprise only if such enterprise carries on business in India through a permanent establishment.

The term “permanent establishment” as defined in Article 5 means a fixed place of business through which business of an enterprise is carried on. The definition requires performance of business activity through a fixed place of business in another country. The expression has been defined as:
a. fixed place of business through which the business of an 

b. enterprise is 

c. Wholly or partly carried on.

The first part of Article 5(1) postulates that the existence of a fixed place of business whereas the second part postulates that the business is carried on through a fixed place. If the second part is not attracted, there is no permanent establishment.[10] Thereby meaning that there should necessarily be a fixed place of business through which the enterprise must conduct business activity and that activity must be income generating.

TREATING SHOPPING

Treating shopping is an expression which refers to the act of a resident of a third country taking advantage of a fiscal treaty between states. A person acts through a legal entity created in a state essentially to obtain treaty benefits that would not be available directly to such person.

The basic feature of treaty shopping is the establishment of base companies in other states solely for the purpose of enjoying the benefit of a particular treaty rules existing between the state involved and the third state. An example of treaty shopping can be the India-Mauritius double Taxation agreement where various companies have been incorporated in Mauritius to take advantage of the Indo-Mauritius DTAA in which capital gains are to be assessed as per the law of the state of residence of the entity .However, under the Mauritian law, tax is not levied on capital gains which means that the capital gains made by the Mauritian entity on transfer of shares in an Indian company go unassessed.

However, the last few tears have seen a change in the approach of the States in the wake of wide reports of extensive money laundering and the tax evasion. As a consequences, a lot of countries are adopting a “Limitation of Benefits” clause in the tax treaties so as o restrict third parties from taking advantage of tax treaties between two other states.

INDIAN TAX REGIME

The Income Tax Act, 1961 (ITA) governs taxation of income in India. According to section 5 of the ITA, Indian residents[11] are taxable on their worldwide income, and nonresidents are taxed only on income that has its source in India.10 Section 6 of the ITA defines who may be a tax resident and contains different residency criteria for companies, firms, and individuals. The scope of section 5 is expanded by the ‘‘legal fiction contained in section 9,’’ which deems certain kinds of income to be of Indian source.

The ITA favors source-based taxation as compared to the OECD model conventions or treaties entered into by many developed countries that favor residence based taxation. Indian courts have supported source based taxation in several cases in the past.

INDIAN POLICY WITH RESPECT TO DOUBLE TAXATION AVOIDANCE AGREEMENTS

The policy adopted by the Indian government in regard to double taxation treaties may be worded as follows:

•  Trading with India should be relieved of Indian taxes considerably so as to promote its economic and industrial development.
•  There should be co-ordination of Indian taxation with foreign tax legislation for Indian as well as foreign companies trading with India 
•  The agreements are intended to permit the Indian authorities to co-operate with the foreign tax administration. 
•  Tax treaties are a good compromise between taxation at source and taxation in the country of residence 
•  India primarily follows the UN model convention and one therefore finds the tax-sparing and credit methods for elimination of double taxation in most Indian treaties as well as more source-based taxation in respect of the articles on ‘royalties’ and ‘other income’ than in the OECD model convention.

CONCLUSION

The regime of international taxation exists through bilateral tax treaties based upon model treaties, developed by the OECD and the UN, between the Contracting States. India has entered into a wide network of tax treaties with various countries all over the world to facilitate free flow of capital into and from India. However, the international tax regime has to be restructured continuously so as to respond to the current challenges and drawbacks. Know more about information: Business tax consultants and Tax consulting company

Further, If you are looking professional assistance on Corporate Law, Direct, Indirect tax law, Accounts Outsourcing or any other related matter, mail us at: -info@carajput.com or call at 011-43520194,

LEADERSHIP SKILLS

Very few people are great leaders overnight. It takes time and practice. As long as you’re open about learning along the way and working with your team on leadership versus dictating to them, most people will be happy to go on the journey with you.

Leadership skills come after a person has tested his waters. What I mean to say is he or she has understood and accepted himself or herself completely. Once you know what you can do and do well, you can build up on that while leading others.

1. Lead By Example. You can’t be an aloof leader, someone that’s never around and incapable of getting your hands dirty. One of the best ways to lead is by example – pitching in where needed, lending a helping hand, and making sure that the work you do is clearly understood by your team.
2. Passion. A leader without passion isn’t a leader. He’s a paper pusher. Or a taskmaster. Or a government employee… Passion drives a lot, and you can inspire so much in others through your own passion and enthusiasm. That doesn’t mean you have to be constantly cheery, it means you’ve got to believe in what you’re doing and what your company is doing.
3. Be Organized. A disorganized leader isn’t leading, he’s chasing his own tail. Disorganization breeds nothing but more disorganization. If you’re frazzled and messy, your team will be too. When you’re organized you’ll be much more productive and so will everyone else.
4. Delegate. You can’t do everything. A great leader needs to be able to delegate effectively. The key to delegating successfully is giving employees ownership of the work you assign them. They can’t just feel like they own the work, they really have to.
5. Take Ownership and Responsibility. Although you’ve just delegated work and truly given your team ownership, you also have to take ownership and responsibility at all times. Your team has to know you’ll be there for them through the good and the bad times. That doesn’t mean you absolve people from making mistakes or ignore crappy work/effort, but it does mean you take responsibility for the big picture.
6. Communicate Effectively. Duh. Everyone knows great leaders have to be great communicators. But there are certain points of communication that many people forget. For example, it’s critical that you communicate to employees how their work matters in the bigger picture. Are they a cog, or does their work truly make a difference?

Communicating success is also something leaders forget to do. People need affirmation. They want to know they did a good job. You just have to tell them.Business set up in India

And be precise. Insecure leaders will often ramble; uninterested leaders cut things off to quickly. Whether you’re giving praise, providing constructive criticism, or defining goals and to-dos, you have to figure out how much to say and in what order. Be precise, specific and concise. Get to the point.

7. Be Brave and Honest. Cowardly leaders will shy away from any number of situations that crop up regularly when running a team. The project your team has worked on for 6 months just got shelved. Now what? Or you have to talk to someone about their lack of effort recently. Do you ignore the problem? Or maybe it’s time to take your product into a new market. Do you hobble forward, scared and nervous, or do you grab the market by the throat?

Leaders are brave. And honest. Tell it like it is. Don’t sugarcoat, don’t obfuscate. Don’t be a jerk either. You have to learn how to present things to your team in an honest but balanced manner.

8. Great Listener. A huge part of being a great communicator is being a great listener. If all you want to do is talk, you’re not a leader. Keeping people motivated means listening to them, asking them questions, understanding their issues. When you listen more, you can respond more effectively and get to the heart of things much faster.
9. Know Your People. You have to know your people. You don’t have to be best friends or even socialize outside work, but you do have to know what makes them tick. You need to know something about their personal lives because their lives outside work matter. Their lives outside work drive a great deal of their success (or lack of) at work. Keep track of simple things: birthdays, marriages, children, etc. The more you know your people the more common ground you’re likely to find, the more you’ll be able to connect.
10. Be a Follower. Benjamin Disraeli said, “I must follow the people. Am I not their leader?” That sums up many of the other points so beautifully. Great leaders are followers too. If you’re a leader without following, you’re a dictator. And as fun as that sounds… Being a leader-follower means finding value in your team, getting inspired by your team, encouraging your team to communicate, brainstorm and be open.

Effective Leadership Skills

For effective leadership & management, the leader needs to have quite a few qualities and skills. So what is it that makes a person an effective leader?

1. Vision: A leader is a visionary and this quality, more than any other, sets a leader apart from the followers. Followers blindly align themselves to the vision and goals of the leader and help the leader accomplish them. But without an envisioned leader, the team will be a directionless group.
2. Ability to Change: The external business environment is becoming more and more dynamic and a leader should be able to change with the times. He should be able to align his vision with what the market wants.
3. Set a Benchmark: A leader should be able to set a performance benchmark and be what he expects the employees to be. He himself should display the set of qualities which he expects from his team.
4. People-Skills: Whatever the monetary and non-monetary rewards, employees will only be really motivated to work if they know what it is that is motivating the leader. So a leader should be able to communicate the effective leadership strategies and his vision to the rest of the team in a way that the employees too feel that 'yes! This is what we want too!'
5. Listening and Not Just Talking: A lot of employees complain that their boss doesn't listen to what they have to contribute and is not open to suggestions. If the leader chooses to listen to what his team has to say, they may be able make valuable suggestions to make a process more effective. Hence, listening too is one of the most important practices for effective leadership.
6. Solving: The path to a goal is often strewn with traps and obstacles. Hence, a leader should have good problem solving and analytical skills which will help him and the team overcome any problem in the path to their goal.
7. Ability to Motivate Others: A leader should know how to get the work done from his team. He should be able to motivate his workers with monetary and non-monetary rewards. He should be able to make his team a part of his vision. A leader should be able to coach his team so that they can give their best performance.
8. Discipline: A leader should be well disciplined himself and should be able to imbibe qualities like professionalism and hard work in his team as well

Confidently Confident

An individual has to be confident, in any case. Yes, a person should have the confidence in his capacities and strengths. At the same time, good leadership skills warrant that a person will have to be mentally prepared if something goes wrong. In case of a managerial set up, an individual will have to delegate work accurately and quickly and hope for things to work out right.

Walk, Talk, Express

A very important skill amongst skills needed to lead people is interpersonal communication. If you do not speak or communicate with others, do not share your thoughts and views, how will you persuade and motivate them? Or at a very basic level tell them what to do? Likewise, a good leader also listens to others and considers their opinions and views just as they do regarding his opinions and thoughts. So the core of all the other things is effective and positive communication. This is a pillar amongst leadership skills for managers. Remember this as a crucial one regarding effective leadership skills.

All Fired Up

Oh no! I am not talking about gunshots. I am talking about the fact that for a person to become a leader, he needs to have a fire and passion for a thing. If a person aspiring to lead others is without a driving force , a strong desire himself, the leading is going to be a huge no-show. The reason? That individual himself is not motivated enough. In that case, that individual will not be able to lead others. So a passion and a strong urge to grow and help others grow, especially in the professional and corporate field is very important for leading others.

In an Instance

People or the followers or subordinates look up to the leader. Leadership qualities and skills, therefore, demand that an individual sets an example for others to follow. In fact by consistently doing that, a person can become a leader. A leader has to pitch in and set high standards and should lead by example. That includes behavioral traits like adaptability, humility, sense of humor and integrity.

Fortune Favors the Brave

A very very tough one amongst leadership skills is to be bold, brave and courageous. A leader has to be brave enough to face any kind of situation and cannot shy away from it. Such leaders know how to divide the work and they grab the problem by the scruff of the neck. Along with this, a person has to be frank and honest to take the responsibility and ownership of a project or anything. There are no shortcuts to this leadership trait!

Look and Decide

In leadership skills, vision and decision making are other to aspects which are inevitable. It is even more important as far as business leadership skills are concerned. Unless a leader has a vision, he or she cannot motivate the others and cannot take decisions regarding that.

Ultimately leadership skills are incomplete if a person does not know the people he is leading well. Hence a leader has to reach to the people and know them. A leader has to know what gets them up and coming and click at their work.

There are a few more things in the leadership skills list, but I guess without these the other minor ones would not count and would be inconsequential! Moreover, it is really difficult to define leadership skills definitely and pin point them. These are just generic skills one needs to have. All this reminds me of what Harry Truman had said, "To be able to lead others, a man must be willing to go forward alone."

CHARACTERISTICS OF A GOOD LEADER

Leaders who have tasted success have done so because of the following reasons:

• Confidence: This is one of the most important and probably the most visible characteristic of a true leader. I have always noticed that no matter what the degree of difficulty they find themselves in, strong leaders always have a sense of confidence and sureness about them. On a personal level, I have tried imbibing this aspect in my daily life and have found that it really works wonders! A super-confident leader can really make a world of difference.
• Communication: Another key characteristic of a good leader; clear and effective communication, is vital for a leader to be successful. Effective communication will ensure that his team thoroughly understands what is expected of them. This translates into appropriate actions which in turn lead to desired results.
• Man Management: A leader must be able to marshal the troops and manage his resources well. Leadership involves having a good sense of understanding between the leader and his team. Each person's views and opinions should be respected and each one's contribution should be acknowledged and appreciated. Being authoritative should not be confused with being dictatorial. A dictator may be a leader, but a leader is not a dictator.
• Decision Maker: Leadership often involves split second decision making. A good leader must think on his feet and should be capable of making quick and smart decisions whenever the need occurs.
• Lead by Example: A leader should always lead by example. Stepping up, shouldering responsibility and getting the job done when the chips are down, is the mark of a true leader.
• Risk Taker: Last but not the least, leadership does require one to take a few risks every now and then. Let me make it clear though, that by taking risks I do not mean being foolhardy and reckless. Risks, when taken, should be taken in a calculated manner and after careful evaluation of the circumstances. It requires good vision along with clarity of thought and action.

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