GAMMON INDIA LIMITED

(e) The transactions of Oman branch, overseas subsidiaries and joint ventures are accounted as nonintegral
operations. The related exchange difference on conversion is accounted under Foreign
Currency Translation Reserve Account.
(f) The transactions of branches at Kenya, Nigeria and Algeria are accounted as integral operation.
Taxation
Tax expenses comprise Current Tax, Deferred Tax and Fringe Benefit Tax.
Current Tax is calculated after considering benefits admissible under Income tax Act, 1961. In case of
overseas subsidiaries and joint ventures, current taxes are calculated on the basis of the taxable income for
the year, applying the tax rate in force, in those countries, as of the balance sheet date.
Deferred Tax is recognized on timing differences being the differences between the taxable income and
accounting income that originate in one period and are capable of reversal in one or more subsequent
periods. Deferred Tax Assets, subject to the consideration of prudence are recognized and carried forward
only to the extent that there is a reasonable certainty that sufficient future taxable income will be available
against which such Deferred Tax Assets can be realized. The tax effect is calculated on the accumulated
timing difference at the year-end based on the tax rates and laws enacted or substantially enacted on balance
sheet date.
Current and Deferred taxes are recorded in the income statement, with the exception of those relating to
items directly debited against or credited to Shareholder’s Equity, in which cases the tax effect is directly
recognized under Shareholder’s Equity. Taxes are offset if and when the income taxes are applied by the
same tax authority and there is a legal right to offset and settlement of the net balance is expected.
At each balance sheet date our Company re-assesses unrecognized deferred tax assets. It recognized
unrecognized deferred tax assets to the extent that it has become reasonably certain or virtually certain, as
the case may be, that sufficient future taxable income will be available against which such deferred tax
assets can be realized.
Tax on Fringe Benefit Tax means the specified rate on the value of fringe benefit in accordance with the
provisions of section 115WC of the income Tax Act, 1961. Accordingly, fringe benefit tax is done as per
the guidance note issued by the Institute of Chartered Accountants of India.
Borrowing Cost
Borrowing costs directly attributable to the acquisition or construction of qualifying assets are capitalized.
Other borrowing costs are recognized as expenses in the period in which they are incurred. In determining
the amount of borrowing costs eligible for capitalization during a period, any income earned on the
temporary investment of those borrowings is deducted from the borrowing costs incurred.
Public Grant
Public Grants, in the presence of a formal allocation resolution, and in any event, when the right to their
disbursement is considered definitive since reasonably certainty exists that the Group will observe the
conditions envisaged for perception thereof and that the grants will be collected, are recorded on an accrual
basis in direct correlation with the costs incurred. The public grants provided for investments are therefore
booked against the purchase price or the production costs of the asset. Other operating grants are credited to
the income statement under the item “Other revenues and income”.
The SPV on receipt of grant as equity support from NHAI accounts the same under Shareholders Funds
under Reserves and Surplus, in accordance with the terms of the concession granted to our company. The
grant related to operations not forming part of equity support will be credited to the Profit and Loss account
Employee Stock Option Scheme
Employee stock options are evaluated and accounted on intrinsic value method as per the accounting
treatment prescribed under Guidance Note on "Accounting for Employee Share-based payments" issued by
the ICAI read with SEBI (Employee Stock Option Scheme & Employee Stock Purchase Scheme)
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