KYC — know your customer is the buzzword in banking sector and elsewhere. In good old days we often read the quote ‘Customer is God’ by Mahatma Gandhi. Under the changed circumstances this quote seems to be redundant with the introduction of ‘Know your customer’ formality. It makes the customer feel that he is no more ‘God’ as per Bapuji’s view. Maybe now the customer is viewed as a devil or a suspect. This is what my friend Herambha Shastri once remarked. However he did not stop there, he encroached into idiosyncrasies of our ‘clients’ giving us bread (applicable to small firms), butter (applicable to medium-size firms) and cheese (applicable to Big Four).
“My dear friend, we also need to do KYC. We have clients of different hues. Clients just flirting with law, law-abiding clients, paying clients, non-paying clients, organised clients, unorganised clients, close relatives as clients, seasonal clients, one-time clients, perpetual clients, local clients, outstation clients, international (MNC) clients, etc. Well, we deal with them day and night! Are you surprised? Check your mobile call log — received calls — the last call at 11.30 p.m. What a generosity we show to them!
At times it so happens that you are attending a funeral of a near and dear one and you receive call from your client. Either to impress or out of compulsion, you answer the call. Despite informing the client that you are at crematorium, he continues: “Sir, first may the soul rest in peace. (Great etiquette indeed!) Please, one second Sir. Can I invest my retirement proceeds in the name of my wife (as if she were his Mumtaz) in a fixed deposit, right now I am in the bank. What should I do? Tomorrow it’s a bank holiday.” You are stumped.
Sometimes you are at a traffic signal and your mobile starts ringing, you identify the person calling you. Oh! A new client or a star client. The moment you answer the call you are spotted by the traffic police hiding in the corner. And your client on the line is asking you how to avoid disallowance u/s.40(A)(3) for cash payment.
My dear friends, if you are in holiday mood and forget to switch off your mobile, clients are bound to play spoil sport. Your family members get irritated. And obviously some urgent matter comes up and you cut short your holiday.
You can’t avoid meeting relatives at family functions. The moment they come to know that you are a C.A., distant relatives become close relatives. Being close relatives they don’t spare you, they feel that you are available 24×7 (note that this is also true with other non-relative clients). Most importantly, you are advising them for free. At times, out of ‘Aatithi Devo Bhav’ ethos you are forced to ask them to join for breakfast, lunch or dinner or a cup of tea. Because consultation takes place at your residence.
Mind you, most of the clients are playing the ‘hideand- seek’ game with you as far as their financial transactions are concerned. When you make enquiries (obviously in client’s interest) in the process of reconciling his investments and income, initially he is very tentative, the moment you talk about ‘penalties and prosecution’ provisions under the Income-tax Act, he reveals something of your interest. You have to play the role of “devil’s advocate” constantly. Devil means the Income Tax officer. Keep in mind, at times your client will not hesitate to share with you his secret love affairs, but not his financial affairs.
Your clients are always ahead you! I am making this statement with full consciousness and experience. Situation number one: They do everything they have in mind to reap the ‘business’ opportunity and ask us to cram it into the ‘legal frame’. So what is left for you is ‘window dressing’. They have their own definition of ‘commercial expediency’. They happen to be at point of no return and you don’t want to lose your client, you keep scratching your head.
Situation number two: They are always influenced by print, electronic media TV/Internet, lectures, seminars, and their personal network. They pose ‘tax planning’ questions to us based on the so-called ‘tax expertise’ they gather from their sources, particularly TV programmes dealing with ‘how to manage your tax matters’ with on-the-spot question — answer segment where eminent tax experts air their views. You get floored by their queries.
So is the case with public awareness campaign by the Income-tax Department, particularly announcement of advance tax due dates. For example, once the 15th June advance tax due date for corporate assessees popped up on the TV screen non-corporate assessees including salaried employees make it a point to confirm from the horse’s mouth meaning ‘you’, whether they are liable to pay any advance tax. The reason for this anxiety of your client, the advertisement comes with a string “if you fail to pay advance tax you attract penalty and prosecution”. Poor taxpayers.
Sometimes your client tells you how his friend or travel acquaintance (from his personal network) has claimed a particular deduction or exemption. You have no choice but to follow the wishes of your client.
Be aware once you start endorsing your client’s views you may feel that you are just rendering ‘courier services’.
Some clients are ‘dashing and daredevil’ clients, they have their own connections with the Incometax Department right from the peon to the Chief Commissioner. So they ask you to do as they say, rest they undertake to ‘manage’.
This is how your clients are always ahead of you. But when you demand certain information, explanations, record and documents he eschews it and air myriad excuses till the time you fire him.
‘Second opinion’ is another fad in the taxpayers community purportedly as an abundant precaution. This opinion ‘poll’ travels from one expert to another till the opinion is to client’s satisfaction. This happens because you give a ‘devil’s opinion’ — opinion against the assessee’s opinion. Some-times the client has it before he approaches you, and then he shrewdly corners you or tests your knowledge on the given issue. But I tell you it is always safe to have ‘second opinion’ to calm down the suspicious clients. This second opinion is also sought when the client invents a new scheme of ‘tax planning’.
I would end my KYC analysis with two more issues.
First, clients at large think tax compliances, particularly dues dates are for you to bother. So you have sleepless nights, blood pressure (high or low) diabetes, etc.
Second, most of the clients are forgetful about your professional charges, but are very particular about getting the work done. Professional charges are always ‘past’ overdue. Either the clients find the fees too high or they are facing financial crunch in the business. In fact, we extend maximum credit period on the earth. Unfortunately, unlike physical goods we cannot repossess services rendered. If you insist for payment of fees/charges they instantly switch over to another professional. So you have to be very patient.
So my dear friend, Do you Know Your Client?
