Sunday, 25 October 2015

Leadership – Yesterday & Today - Voices from the Sector



Strong leaders not only need to have a vision and the ability to initiate change, they must model the values, actions, and behaviours necessary to make the vision reality. How do you do define and implement leader ship? Is leadership associated with seniority or one’s position in the hierarchy of the organisation? Let us hear thoughts from various voices from the social sector.

We asked one doctor, an educationist and a CSR Head, who have ties with the social sector. What the essentials of a good leader are and the one that inspires them. 
Dr. Vispi Jokhi is an orthopaedic doctor and Trustee of Ahura Support – a non-profit support group for the disabled. According to him, “A good leader is a visionary innovator capable of taking calculated risks and staying the course in case of failure. A great communicator, listener, team builder, ready to give credit for success to the team and take blame for failures on himself. One can be a dreamer and out-of-the-box thinker but practical and with sound domain knowledge of the industry. The person who inspires - Without a shadow of a doubt, Mahatma Gandhi. A classic Karmayogi, capable of loftiest idealism combined with the shrewdness of a skilled negotiator. He was imbued and immersed in his visionary ideas and yet detached. He would never compromise on the means adopted in his work, even for the loftiest of goals. Above all he practiced what he preached.” 

Diana Marfatia has been associated with various leadership roles within the education sector for over 20 years. Currently, Headmistress of a leading International School of Mumbai, she also has been a mentor of an educational cum leadership development programme called the Holiday Programme for Youth (HPY). Her five essentials of a leader - “ one who manages to: align the team in line with the task at hand, synchronises the team harmony to be able to create a harmonious 'symphony', defines the purpose and sets appropriate goals, helps to energise the group to undertake the activities to achieve the goals and achieve success, allows others to lead, without losing control and continuously learns.”


 
Foram Nagori, from Taj Hotels, Resorts & Palaces works for social responsibility strategy, deployment & monitoring & United Nations Global Compact/triple bottom line reporting – among various other CSR-linked expertise. She feels, “Genuineness, ability to inspire people, collaborate with multiple stakeholders/experts & catalyze innovation.” Undoubtedly she is inspired by, “Abdul Kalam – for his connectedness with motivating the masses & driving policy/strategy with equal flair!”  



 
 
Manager and leader are two completely different roles, although we often use the terms interchangeably. An ongoing debate in academic circles over the past 50-odd years relates to the correlation between leadership and management. Does a manager have to be a great leader? Does a leader need to have good management skills?

Diana feels it is distinct, “A MANAGER is a person who through his work experience learned the process of doing things according to the ethos of his institution. A manager is just that person who will make the engine move and keep the company/institution going. He may not need to be compassionate or may not need to have emotional intelligence, which are vital ingredients of being a good leader. A LEADER on the other hand is the one who irrespective of his position, influences inspires and builds people up to perform that are aligned to his and the team’s goals. Difficult-to-achieve as these goals may be, but he stays in the front line and leads by example – guiding, provide logistical & emotional support to ensure team success.
She highlights, “A  manager does not often make a great leader but a good leader needs to have good management skills and much more.”

Vispi feels “Actually this debate about leadership and management is more about nature vs. nurture. While there is an element of natural leader, this alone cannot compensate for trained managerial skills. So effectively, both are essential in almost equal measure.”

Foram echoes similarly, “Leadership and management are both like two intersecting venn diagrams. Some components do overlap but obviously they are not the same! For some situations you need management, for some others leadership and for most – both management & leadership.”

Thus it would be fair to conclude - Leadership and management must go hand in hand be and complementary. Any effort to separate the two is likely to cause more problems than it resolves.

 
Different types of leadership styles exist in work environments. Advantages and disadvantages exist within each leadership style. The culture and goals of an organization determine which leadership style fits the firm best. Here are some - 

A laissez-faire leader lacks direct supervision of employees and fails to provide regular feedback to those under his direction. This leadership style deters the production of employees needing supervision.

The autocratic leadership style allows managers to make decisions alone without the input of others. This leadership style benefits employees who work without close supervision. Creative employees who thrive in-group functions dislike this leadership style.

Also known as the democratic leadership style, participative leadership values the input of team members and peers, but the responsibility of making the final decision rests with the participative leader. This style may boost employee morale because employees contribute to the decision-making process. This style meets challenges when decisions need to be taken within a short period.

Managers using the transactional leadership style generally implement the ‘carrot & stick’ method, providing rewards and reprimands. Those rewarded with performance based increments of promotions generally feel enthralled but those who do not make the mark begin to feel insecure and get restless, sometimes destructively

The transformational leadership style leaders focus on the big picture within the organization and delegate smaller tasks to the team to accomplish goals. This style depends on high levels of communication from management to meet goals.

Whatever the style, all leaders need indispensable leadership qualities or skills. Among many there have been some popular ones – Looking forward, Empowering others, Accomplishment, Decision making, Engaged, Risk-taker

 
Having said that it does not matter if you are entry level or senior level; there are certain traits that all leaders share. Everyone at some point or the other encounters and manages a leadership situation or gets motivated by one. 

Vispi cites a sporting one, “I think that the moment which comes to my mind is M.S. Dhoni captain of the world cup winning team in 2011, leading from the front in the finals, walking into a pressure situation and taking the team to a win. At the end his ability to give credit to his team seen on numerous occasions is truly etched in my memory as an example worth emulating.”

Diana recollects an incident that made her aware of her leadership potential. “When I was the Principal in a previous school, we happened to be working closely with the then Education Inspector of that zone, a very upright and ethical lady. In addition, she had a clear vision and made us all work hard towards making her vision a reality for the students under our care. She wanted a group of Principals to come together and work closely on writing a Manual, which she thought, would benefit all Principals. We team members were leaders in our own right and in a sense all at the same hierarchy. However, as we started working it just so happened that I saw myself leading discussions, making strategies to break the big task in to small achievable parts, and then moving on in a logical and sequential manner. This helped us achieve our goal and complete the task successfully. I was pleasantly surprised to find that my team mates let me take the lead and in fact often voiced that I made a good leader and one that understood the task at hand very clearly and got the work done in a congenial and healthy work environment. This situation has left a lasting impression on my mind, as I too learnt so much from it.”

Foram concludes, “As a first recruit in Ladakh Autonomous Hill Development Council support project of TISS & SDTT Trust, I was required to work like a young leader & social entrepreneur to partner with multiple stakeholders there and setup processes for participatory planning & plan for capacity building of the development partners and Government functionaries. This role of catalyst & facilitator is very early years of my career brought out various leadership skills in me “

Leadership is not a one-size-fits-all definition. We all have our own philosophies; some people think leadership means guiding others to complete a particular task, while others believe it means inspiring and empowering other members of your team to deliver their best. While the definitions may vary, the general sentiments remain the same: leaders are people who know how to achieve goals and motivate people along the way.

Friday, 9 October 2015

Applicability of Service Tax to NGOs/NPOs


Several NGOs/NPOs continue to live under the myth that because they are tax exempt under 12AA or 10(23C) they would also be exempt automatically under Service Tax. Some clarifications from our legal head Noshir Dadrawala. 


It is important for all NGOs/NPOs to know and understand that while Income Tax Act is a Direct Tax, Service Tax is an indirect tax.
If an NGO/NPO offers a service that is not listed in the ‘Negative List’, such as, for example, ‘consulting service’, service tax would apply if consideration from such service exceeds ten lakhs of rupees in any financial year. The current service tax rate is 14%.

The term ‘Service’ means:
·       any activity
·       for consideration
·       carried out by a person for another
·       and includes a declared service

Therefore, an activity for consideration carried out by a person for another person can be included as service and it may also include a declared service. In other words, any service provided for a fee or when something is received in return would be considered as a service. All services except those provided in the negative list would be considered as taxable services.
The Service Tax Act has made all services taxable except those services which are specifically exempted. Under current law, almost all services rendered by NGOs on commercial basis or on consultancy contract are taxable under Service Tax.
Only some NGOs (not all) registered under Section 12AA of Income Tax Act, 1961 are totally exempted from Service Tax.
Earlier, NGOs engaged in “advancement of any other object of general public utility” were exempt up to a certain limit of taxable services in addition to the blanket exemption of Rs. 10 Lakhs. However vide Notification No.33/2012-ST dated 20/06/2012 the special exemption given to this category of NGOs has also been withdrawn, meaning thereby there is no special exemption for NGOs engaged in “advancement of any other object of general public utility” though, to repeat, they can avail the basic service tax exemption of Rs. 10 Lakhs.

It is critical to note that the Service Tax law has taken a narrow definition of the term ‘charitable purpose’ which is different from the definition of charitable purpose under section 2(15) of  Income Tax Act 1961.

Service tax exemption has been provided to only those NGOs which are registered under section 12AA of the Income Tax Act, 1961 and carrying on one or more of the following charitable activities:

(1) NGO engaged in public health by way of:
(a) care or counseling of (i) terminally ill persons or persons with severe physical or mental disability, (ii) persons afflicted with HIV or AIDS, or (iii) persons addicted to a dependence-forming substance such as narcotics drugs or alcohol; or
(b) public awareness of preventive health, family planning or prevention of HIV infection;
(2) NGO engaged in advancement of religion:
(3) NGO engaged in advancement of educational programmes or skill development relating to:
(a) abandoned, orphaned or homeless children;
(b) physically or mentally abused and traumatized persons;
(c) prisoners; or
(d) persons over the age of 65 years residing in a rural area;
(4) NGO engaged in preservation of environment including watershed, forests and wildlife.

Therefore, in light of the above definition, Service Tax is applicable to:
a) NGOs which are not registered u/s. 12AA of the Income Tax Act, 1961.
b) NGOs which are engaged in relief to poor, preventive health, informal education programs, etc.
c) NGOs which are engaged in “advancement of any other purpose of public utility”.

Some of the services covered in the Negative list include:
a) Services by way of:
i) Pre-school education and education up to higher secondary school or equivalent;
ii) Education as a part of a curriculum for obtaining a qualification recognized by any law for the time being in force;
iii) Education as a part of an approved vocational education course
(Hence, non-formal education is not covered under the exempt category of Service Tax and therefore any collection from non formal, program would be subject to service tax.)
b) Services by way of renting of residential dwelling for use as residence;
(I.e. if the NGO is renting out properties for non-residential purpose then this rent income would become service subject to Service Tax.

CAP offers legal and other compliance advisory to nonprofits and the social sector. For further queries, contact - connect@capindia.in