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We provide complete advisory services for EPC contractors on aspects of:
Choice of legal Forms for executing EPC Contracts
Drafting and Negotiation of terms of EPC Contracts
Communication/notices in terms of Contract with Client to safeguard interest of EPC Contractor
Compliances required under FEMA
Taxability of parts of EPC & Issues pertaining to Transfer Pricing
Indirect Tax Implications
Several disputes may arise in executing EPC contracts- such disputes could be time-related, cost-related, or quality-related. However, whatever claim may arise in such contracts, our team is well-versed in the remedies available under Indian law and can help your business take the best course of action.
Various aspects of EPC contracts where we could be of assistance are explained hereunder.
- Choice of legal Forms for executing EPC Contracts– There are several legal forms for conducting EPC contracts, each with its separate set of eligibility criteria, suitability, restrictions, compliance requirements, etc. We are experienced enough to guide our clients in choosing the most appropriate legal form for instituting EPC contracts for their businesses to maximize their profits and streamline the entire process.
- Drafting and Negotiation of terms of EPC Contracts– There are several aspects to be considered carefully while drafting EPC contracts, which is animated by the fact that time is of the essence in such contracts. Depending on the nature of the contract, there are different elements to consider while drafting an EPC contract, such as performance criteria, terms of consideration, the responsibility of each party, etc. Our team will be able to guide our clients on drafting and negotiating a sound EPC contract which ensures our clients are legally protected against misgivings that may arise in its execution.
- Communication/notices in terms of Contract with Client to safeguard the interest of EPC Contractor- It is prevalent for issues to arise. In contrast, EPC contracts are being executed by the contractor, which is why it has become increasingly essential to lay down the responsibilities and terms of the contract in sufficient detail to protect the interests of the EPC contractor. While an appropriate draft can mitigate the risks, equally important is to have proper communication and notice correspondence during the work execution phase when circumstances warrant; a well-drafted contract with no contact during the execution phase is of no avail.
- Compliances required under FEMA– While foreign companies are fully capable of executing EPC projects in India, such execution is subject to various FEMA compliances. Our team can successfully guide our clients into following the proper application procedure for establishing a PO in India, from using the requisite registration form to reporting requirements, transferring assets, etc.
- Taxability of parts of EPC & Issues about Transfer Pricing– The taxability of different parts of EPC depends on whether the supplies in question are obtained offshore or onshore, along with the aspects of the permanent establishment of the company. Setting an appropriate transfer price compliant with Transfer Pricing Regulations for the supply of goods/ services internally within business groups and between subsidiaries operating under common control is essential for tax incidence optimization. As a business, one of your prime objectives would include maximizing your profits, and our specialized team of experts would be happy to guide you on the best economical way to navigate transfer pricing while being legally compliant.
- Presumptive Taxation– Presumptive taxation allows parties to declare their income at a prescribed rate, relieving them from having to do the tedious work of maintaining their books of accounts and ensuring that their accounts are audited. Our team will primarily advise on whether opting for presumptive taxation is feasible and whether it would be in the best interest of a given EPC Contractor and then proceed to guide through aspects of filing under the presumptive taxation regime so there are no lapses in tax compliance.
- Indirect Tax Implications– EPC contracts are subject to GST, one of India’s several indirect taxes levied. While the issues and legal intricacies involved in the levy of work contract services, along with their appropriate valuation, are complicated, our specialized team is well-versed in the law. It can successfully guide clients into making the best legally-sound tax decisions to execute their work contracts.
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