EPC Contracts: Legal, Tax Challenges & Opportunities

Module Duration:
205 minutes (comprising of 2 episodes)

Module Background:

As you are aware,  Engineering, Procurement and Construction (EPC) contracts come with their own set of challenges, especially considering the size, complexity and value of the projects. Complications are even more in case of cross-border EPC contracts involving overseas contractors/ suppliers executing projects in India. As the value of many of these projects runs into hundreds and thousands of crores and the period of execution spreads over a number of years, every step in the process needs to be carefully planned providing for various future eventualities and contingencies. Contracts have to be tightly drafted to avoid disputes relating to the scope of supplies/ services, risks and responsibilities, price, delays, etc. Apart from disputes relating to time and cost overruns, it is also very common to see disputes relating to the consequences of change in the law. As such, it is imperative to provide for a robust dispute resolution mechanism in the contracts in the form of arbitration.

Further, a multitude of taxes are applicable on such transactions including Income Tax, Goods and Services Tax and Customs Duty, any unforeseen adverse tax consequence can considerably increase the cost for the contractor and/or companies and make the project unviable. It is imperative for all the stakeholders to appropriately evaluate tax implications on various aspects of the transaction and agree upon the liability inter se between the parties. The fact that a number of contractors/ suppliers typically come together to form a consortium to bid for and execute such EPC contracts, increases the risk of such unincorporated arrangement being construed as an Association of Persons (AoP) for tax assessment purposes.

What shall the module cover?

Against this backdrop, Taxsutra is delighted to present an intriguing module on “EPC Contracts: Legal, Tax Challenges & Opportunities” in association with premier law firm Lakshmikumaran & Sridharan (L&S). In this module, Legal Stalwart Mr V. Lakshmikumaran (Founder and Managing Partner, L&S) has led a team of experts from L&S in examining various aspects relating to EPC Contracts, which includes following:

• Different types of EPC Contracts
• Bidding for and entering into EPC Contracts: Key Considerations
• Emerging models for executing EPC Contracts in India
• Key implications and controversies under Income Tax, GST and Customs Laws
• “Change of law” clauses in contracts
• Challenges in Cross-border EPC contracts
• Benefits under the Foreign Trade Policy
• Consortium of Contractors – Key Tax Disputes
• Dispute Resolution: Role of Arbitration