Wrong calculation method causes Rs 3.45 cr loss to MEA: CAG

The CAG has rapped the Ministry of External Affairs for giving undue financial benefit of Rs 3.45 crore to a visa service provider hired by the Indian High Commission in London.
In its latest report tabled in Parliament, the CAG said the loss of Rs 3.45 crore was caused due to wrong calculation of rates between October 2011 and December 2012.
"The Indian High Commission in London used erroneous method in increasing the service charge to a visa support service provider led to a loss of Rs 3.45 crore,"the CAG said.
The CAG said the High Commission of India in London and its consulates in Birmingham and Edinburgh had given the contract of providing visa support services to M/S VF Services (UK) Ltd.

In July 2010, the company requested the Mission for an increase in the service charge from 6.90 pounds per applicant to 8.80 pounds on the account of increase in taxes, drop in the number of applicants and depreciation of pound against the rupee.
"The Ministry wrongly applied the rate of increase of 12 per cent in property taxes to the entire service charge instead of restricting it to the percentage of property tax in the service charge," the CAG noted.

The Ministry agreed to revise the service charge by 12 percent due to increase in local taxes and enhanced the service charge to 7.70 pounds per applicant from September 2011.

However, the property tax paid by the service provider during 2010 and 2011 was 1,27,230 pounds and 1,39,969 pounds, which is 12,739 pounds more. In 2010, it collected service charge of 34,38,498 at the rate of 6.90 pounds per application.
"In percentage terms the property tax increased by 3.70 percent in 2010 and 4.07 percent in 2011. Therefore the increase in property tax was only 0.37 percent of the existing charge levied by the service provider," the report stated.
Instead of enhancing the increase in service charge to 0.37 percent, the Ministry increased it to 12 percent.
The report further states that the increase should have been 6.93 pounds per applicant rather than 7.70 pounds. This resulted in loss in loss of 4,55,688 pounds (Rs 3.45 crore) from October 2011 to December 2012.