EPC Contracts - BMR & Associates

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TAXABILITY OF OFFSHORE SUPPLIES Circular 23 of 1969 • Taxability of offshore supplies one of the most debated issue • CBDT sought to end the debate by issuing Circular 23 • As per circular, income from offshore supplies can be claimed tax exempt provided: Transfer of title (ie risk and ownership) in the equipment and materials passes to buyer outside India Entire sale consideration is received outside India by the seller Sale is at arms length Contract for supply of equipment is executed outside India • Critical to build safeguards in contract documentation • Revenue authorities taking contrary view in some cases Back <strong>EPC</strong> CONTRACTS - FISCAL SCENARIO All rights reserved | 22
INSTALLATION PE – SOME EXAMPLES Installation PE under India – France treaty “A building site or construction, installation or assembly project constitutes a permanent establishment only where such site or project continues for a period of more than six months” “an installation or structure used for the exploration of natural resources provided that the activities continue for more than 183 days” • Installation PE under India – UK treaty “A building site or construction, installation or assembly project or supervisory activities in connection therewith, where such site, project or supervisory activity continues for a period of more than six months, or where such project or supervisory activity, being incidental to the sale of the machinery or equipment, continues for a period not exceeding six months and the charges payable for the project or supervisory activity exceed 10 per cent of the sale price of the machinery or equipment” Back <strong>EPC</strong> CONTRACTS - FISCAL SCENARIO All rights reserved | 23
Page 1 and 2: T a x a n d R e g u l a t o r y EPC
Page 3 and 4: TAXES ON CONTRACTS - A SNAPSHOT EPC
Page 5 and 6: SUPPLY OF GOODS Structure 1 Structu
Page 7 and 8: SERVICES Outside India India Offsho
Page 9 and 10: COMPOSITE CONTRACT - EPC • Where
Page 11 and 12: INCOME TAX IMPLICATIONS Classificat
Page 13 and 14: SINGLE CONTRACT - SINGLE CONSIDERAT
Page 15 and 16: EPC CONTRACTS FOR OIL FIELD SERVICE
Page 17 and 18: EPC CONTRACTS FOR POWER PROJECTS
Page 19 and 20: INFRASTRUCTURE STATUS TO PIPELINES
Page 21: C h a l l e n g e U s EPC CONTRACTS
Page 25 and 26: TAXABILITY OF SOFTWARE Recent rulin
Page 27 and 28: TAXABILITY OF AOP Separate taxable
Page 29 and 30: TAXABILITY OF AOP (CONT) Tax rate I
Page 31: INFRASTRUCTURE STATUS TO PIPELINES

EPC Contracts - BMR & Associates

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