Professional Documents
Culture Documents
A
Report on
“Corporate Tax Planning at NCC Limited”
MBA SEMESTER 3
Division:- A
Batch:- 2017-19
Submitted To
Dr. Ashish Mehta
Submitted By
Sagar Patel (17F33)
Yash Dave (17F43)
NCC LIMITED:- Brief about Company
M/s Nagarjuna Construction Corporation was established in 1978 as a partnership firm. It was a
firm promoted by AVS Raju and his associates, which later converted into a limited company in
1990. NCC was incorporated on March 22, 1990 as Public Limited Company. . It took over the
business of the erstwhile partnership firm, Nagarjuna Construction Corporation. NCC has
progressed consistently over past three decades. It is among the top three construction companies
in India in terms of revenue. NCC was born from a vision to provide world class construction
solutions with focus on quality, timely completion, customer satisfaction, continuous learning
and enhancement of stakeholder’s value. The company is mainly engaged in construction and
allied activities. It operates across 9 verticals: buildings and housing; transportation; water and
environment; electrical; irrigation; international operations; power; oil and gas; metals; mining;
and railways. It also has a presence in the Middle East where it currently undertakes works in
roads, buildings, and water segments.
It handles EPC contracts in these sectors and BOT projects in the areas of roads and power. In
2010, NCC’s order book crossed Rs 150 billion. The company has gained credibility owing to its
quick turnaround time, in time and within cost deliveries, organisational strength and financial
stability and, above all, quality of world standards. All these have earned appreciative clients for
NCC.
In fact, the company’s repertoire is rapidly growing to include overseas companies and
governments too. In 2010, Chairman Emeritus Dr AVS Raju was awarded the Padmashri in the
trade and industry category. NCC was also recognised as one of CW’s Most Admired
Construction Companies in 2009 and its annual report and accounts for the year ended March 31,
2009, were adjudged 2nd best under the category ‘Infrastructure & Construction Sector’ by ICAI
Awards for Excellence in Financial Reporting. These are just a few in a long line of accolades.
Interestingly, NCC’s construction of a combined water supply scheme in Amaravati district for
156 villages and augmentation of water supply scheme in two towns for the Maharashtra Jeevan
Pradhikaran was featured in the Limca Book of Records for design and execution of the largest
regional scheme to supply pure drinking water right to the consumer’s tap, with the help of
gravity alone, without the use of electricity or pumps.
In 2011, Company has changed its name from Nagarjuna Construction Co. Ltd. to NCC Ltd. -
Registered Office of the Company has been shifted from 41, Nagarjuna Hills, Punjagutta,
Hyderabad-500082 to "NCC House", at, Madhapur, Hyderabad-500081.
To ensure that CSR remains an ongoing activity and receives maximum attention, NCC Limited
set up the NCC Foundation, earmarking a portion of NCC Limited’s net profit every year for the
social and philanthropic activities of NCC Foundation. With a wide range of socio-economic and
educational initiatives, NCC Foundation touches the lives of the unheard and unserved.
NCC Foundation will:
(a) Create, maintain and support need-based and region-specific services to the poor and
needy in the areas of:
Housing
Healthcare
Education
Training
(b) Undertake rural and community development projects
This foundation also under takes projects like NCC - Indiramma Housing Colony where NCC
Foundation extended cooperation to the Govt. of Andra Pradesh’s Indiramma Housing Scheme
by facilitating housing for 155 beneficiaries in Antarvedipalem in East Godavari Dist. of Andhra
Pradesh.
1. Corporate Tax Planning: - Corporate tax planning is a means of reducing tax liabilities
on a registered company. The common ways to do this includes taking deductions on
business transport, health insurance of employees, office expenses, retirement planning,
child care, charitable contributions etc. Through the various tax deductions and
exemptions provided under the Income Tax Act, a company can substantially reduce its
tax burden in a legal way. Once again, tax planning should not be confused with tax
avoidance and all the planning should be done within the framework of law.
NCC has approved 11 projects U/S 80IBA which provide 100% deduction on profit or
gain from such projects. Major projects are as under
U/S 80IA, Deduction is available upto 100% of profit and gain from Infrastructure
project for 10 consecutive years within 15 years from the year in which it began to
operate.
Construction of toll roads, sea ports, airports, bridges, railway systems, highway projects
and water supply and irrigation projects now come under Section 35AD of the Income
Tax Act that allows deduction of capital expenditure incurred on these activities from the
earnings while calculating taxable income in the subsequent year.
i) is set up in India for the generation or generation and distribution of power (begin to
generate power during 1.4.1993 to 31.3.2017
(ii) starts transmission or distribution by laying a network at any time during 1.4.1999 to
31.3.2017. (deduction in respect of profits from the laying of such network of new lines only)
iii) undertakes substantial renovation and modernization of the existing network, at any time
during 1.4.2004 to 31.3.2017.
Power undertaking companies can get deduction up to 100% of Profit for 10 consecutive
years within 15 years of starting business.
NCC limited is in business power transmission and distribution. So they are getting benefits
of deduction on the project executed by them. Some of the recent projects on which NCC
limited is getting benefits of deduction U/S 80 IA are as follows
Rural Electrification works of Dumka Package Comprising of Dumka & Jamtara Districts in
Jharkhand State under Deen Dayal Upadhyay Gram Jyothi Yojana (DDUGJY) Ranchi.
Rural Electrification works of Ranchi District in Jharkhand State under Deen Dayal
Upadhyay Gram Jyothi Yojana (DDUGJY).
Urban Electrification works of Deogarh Electric Supply Circle of JBVNL covering three towns
(Deoagarh, Godda & Madhupur) in Deogarh & Godda districts in Jharkhand
Rural Electrification and other related works on Turnkey basis in district Mirzapur, Sant
Ravidas Nagar & Sonbhadra in Varanasi under Saubhagya Yojna of Govt of India.
Rural/Urban Electrification Works Of Cluster -14 (Behraich) District Of Uttar Pradesh Under
Pradhan Mantri Sahaj Bijli Har Ghar Yojana “ Saubhagya”
Rural Electrification works of package-6 (Comprising of Palamu, Latehar & Garhwa) districts in
Jharkhand State under Jharkhand Sampurna Bijli Achchhadan Yojana (JSBAY)
NCC Ltd have made their presence felt through prestigious water and sanitation projects -
including the unique Limca Book of Records entry, the 820 kms.’ gravity-based water
supply system in Amaravati, Maharashtra. Over the next few years, water supply and
sanitation projects are expected to witness significant outlays. their past experience and
excellent credentials will help them cruise through this space successfully.
For Promoting Water supply and distribution, Government provides tax incentive under
section 35AD. U/S 35AD, Deduction is available upto 100% of capital expenditure
incurred incurred on development of infrastructure for water supply.
Some of the key projects undertaken by NCC Limited and eligible for deduction U/S
35AD are as follows
NCC Limited can get deduction under section 35AD for developing infrastructure for
irrigation projects which is 100% of capital expenditure
Key projects undertaken by NCC Limited for creating irrigation infrastructure are as
follows and the company has claimed deduction U/S35AD on following projects.
Indian Railway provides many infrastructure projects to NCC Limited. Some of the
recent projects are as follows
Vellore Gauge Conversion Project
Construction of 3rd line between Habibganj and Sanchi, near Bhopal
Doubling works between Jakapura and Basantpur, near Bhubaneswar, Odisha
3610 m long elevated viaduct having 7220 m of precast parapet casting and erection for
Bangalore Metro Rail Corporation, Karnataka
Railway line for Delhi Metro Rail Corporation Limited
Railway siding for NTPC, Korba
Some of the key projects recently completed by NCC Limited are as follows
8. Mining business
To address the widening gap between demand and supply of coal and the
increased demand for power, Government of India has allocated captive coal
blocks to private companies. This will generate greater possibilities for
investment and growth in Mining.
Some of the key projects undertaken by NCC Limited related to mining business
are as follows
No specific deduction is available for mining business under income tax Act.
NCC Limited planned their business activities keeping in view tax benefits available in
different business. They are claiming this tax benefits while filling return of income U/S
139. If company does not claim deduction in return of income, even though they are
eligible to get deduction, deduction benefit will not be available to the firm.
TAXES PAID BY NCC LTD IN LAST 5 YEARS
EXPENDITURE :
Preference Dividend 0 0 0 0 0
Above profit & loss account, indicates that Tax paid to Profit before tax percentage is different
for different years because of tax deductions that NCC Limited has claimed and get. It can be
seen that tax paid to PBT was 29.71 % in 2014-15 , 25.55% in 2015-16, 15.59% in 2016-17 and
22.01% in 2017-18. Corporate income tax is 30% but NCC limited gets tax benefit every year as
it has undertaken infrastructure development projects for which income tax act provide deduction
in calculating taxable income, therefore their Tax rate is lower than 30%.