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Tax health diagnostic review for an Indian polymer manufacturer

Engagement: One of India’s leading polymer manufacturers faced leakages in their system of collection and payment of taxes, irregular compliances, etc. due to inadequate knowledge of various provisions under the law. They approached SKP to analyse and identify the implications from an indirect tax perspective.

The client had adopted inappropriate rates for payment of duty, overlooked certain transactions that were liable to tax, and adopted highly litigative positions. Maintenance of records and documentation was improper and the client faced tax audits conducted by the tax authorities.

The challenges included:

  • Understanding the financial and contractual structure 
  • Understanding the business model and transaction flow 
  • Reviewing the relevant contracts proposed to be executed from an indirect tax perspective
  • Applicability of various indirect taxes/highlighting tax exposure
  • Evaluating and adopting appropriate tax positions
  • Choosing the most tax-efficient business model 


SKP assisted the client as follows: 

  • Understood their business activities and reviewed key income streams to identify transactions liable to tax
  • Reviewed each transaction leg from a cost and tax perspective
  • Reviewed documentation and the process along with the company’s procedural compliances
  • Verified records maintained by the company and ascertained their adequacy
  • Provided a detailed analysis of segments with discrepancies and the legal implications
  • Evaluated potential tax costs and savings, including interest and penalty cost 
  • Evaluated various tax positions that could lead to litigation in the future
  • Evaluated foreign trade policies and suggested various others to gain maximum benefits from foreign trade
  • Assisted in selecting indirect-tax-cost-efficient schemes 
  • Developed alternate indirect tax models
  • Evaluated validity of tax assumptions
  • Recommended final tax positions to be adopted
  • Developed alternate structures
  • Recommended the final structure


Value Delivered
With SKP’s in-depth review and evaluation, the client got a better understanding of the tax health of the company. They were able to design an effective management structure to obtain control on their tax compliance activities. They made substantial savings in tax costs and were able to analyse and implement the most efficient operation model.