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PDF Editor FAQ

Instamojo is taking money from buyers into its own bank before transferring the money to the seller. Are they authorized to do that? What if they use the funds for something other than paying the seller?

For the sake of completeness, I just wanted to add that the funds from the buyers are kept in a non-interest bearing escrow account that's audited by the bank on behalf of the RBI. The operation of this account is based on the bank's underwriting of Instamojo and the activity in this account is limited to a specific set of credits and debits that are outlined in the escrow agreement- such as accepting payments from buyers, paying out the merchant, refunding the buyer and a few more that are required in the normal course of operations.

How do escrow payments get treated for tax purposes?

Generally income would be recognized when you have unconditional rights to the funds. Since the money is in an escrow account, it would depend on the terms of the escrow agreement and when you had the right to withdraw the funds. The same rules would apply to the buyer's or seller’s side of the transaction.

Are the YouTube founders personally liable for the copyright infringement that occurred on their site?

No, the acquisition agreement with Google sets aside a 5% escrow for any IP liabilities. Per the terms of the agreement, this is the maximum liability exposure of any YouTube shareholder.

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