Cooperative Education Report

Analyzing Business Expenses Deduction Available to Surya Nepal Pvt. Ltd

Written by:

Palak Singh Rathour

Student ID: 6008040061

This Report Submitted in Partial Fulfillment of the Requirements for

Cooperative Education, Faculty of Business Administration
Academic Semester 1/2020
Siam University

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Title: Analyzing Business Expenses Deduction Available to Surya Nepal Pvt. Ltd

Written by: Ms. Palak Singh Rathour (ID: 6008040061)

Department: Bachelor of Business Administration (Finance)

Academic Advisor: Aj. Somsak Nontaganok

We have approved this cooperative report as a partial fulfillment of the cooperative education

program semester 1/2020.

Oral Presentation Committees

…………………………… ……
(Aj. Somsak Nontaganok)
Academic Advisor

………………………………………………….
(Miss. Anushree Pande)
Job Supervisor

……………………………………………….
(Dr. Eng. Duminda Jayaranjan)
Cooperative Committee

………………………………………………….
(Asst. Prof. Dr. Maruj Limpawattana)
Assistant President and Director of Cooperative Education

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Project Title: Analyzing Business Expenses Deduction Available to Surya Nepal Pvt. Ltd
Credits: 6
By: Ms. Palak Singh Rathour
Advisor: Aj. Somsak Nontaganok
Degree: Bachelor of Business Administration
Major: Finance and Banking
Faculty: Business Administration
Semester / Academic year: 2/2020
Abstract
This Cooperative report entitled “Analyzing business expenses deduction available to Surya
Nepal Pvt. Ltd” has the goal to examine the operational system and financial strategies used by a
multinational company. Objectives of the study include: (1) to understand the Income tax act of
Nepal. (2) to implement the knowledge gained and understanding about the deductible expenses of
Income tax act. (3) to gain the knowledge and help execute strategies, operations smoothly for the
tax department. The company Surya Nepal Private Limited which is an Indo-Nepal-UK joint
venture, now the largest private sector enterprise in Nepal and a subsidiary of ITC limited India, I
was assigned to work as Researcher and was responsible for working in the department of tax and
legal during the period 17 September, 2020 to 17 January, 2020. The main responsibilities included
duties like understanding the business expenses and deductible expenses, getting an idea for
claiming business expenses, knowing the Income act law of Nepal from the Inland Revenue
Department, Cases analysis of different countries, doing comparison with Indian tax regime and
many more. Various issues arose throughout the internship, but excellent advice and supervision
from the supervisor made this experience great and educational. As a person, I've learnt a lot more
about work ethics and have been able to improve my communication and interpersonal skills, which
are crucial for job advancement and profession.

Keywords: Deductible expenses, Income tax act, learning, knowledge.

 Acknowledgement

I would like to take this opportunity to acknowledge all the people for the successful
completion of this report. I wish to extend my sincere thanks and gratitude to Surya Nepal, Head
Office, Kathmandu, for providing with this internship opportunity at their prestigious premises.
This internship was an incredible learning experience for me and I am forever thankful.

Similarly, I want to express my deep sense of gratitude to Miss. Anushree Pande, my

supervisor, for her constant support and guidance throughout my internship tenure. I would also
take this chance to appreciate Mr. Ravi kc for permitted me to undergo the internship in their
esteemed organization and giving me the opportunity for the successful completion of the
internship.

I am very thankful towards Siam University and Kathmandu College of Management for
giving me such a wonderful opportunity to realize my capabilities via this internship program. I
would like to express my sincere gratitude to our Principal, Mr. Bishnu Raj Adhikari and Assistant
Coordinator of Co-operative Education program, Dr. Duminda Jayaranjan for providing their
assistance for the successful coordination and supervision of the whole co-operative program. I
would also want to extend my appreciation to Aj. Somsak Nontaganok for helping me with
necessary guidelines and supervision in completion of this report. Furthermore, I also wish to
express my deepest gratitude to my academic supervisor Dr. Maria Shrestha, for guiding and
advising me in the development of my internship report.

Thus, I humbly extend my deepest gratitude to everyone who was directly and indirectly
involved in helping me to successfully complete this internship and co-operative program. I am
short of words to express my gratitude. I hope I can build upon the knowledge and experience I
have gained and utilize them to the best of my potential in future endeavor. Combined support of
all the above- mentioned led me to complete this research report and I am very grateful to all of
them.

Palak Singh Rathour

(6008040061)

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 Important Note

COVID-19 Pandemic effect at Surya Nepal

Covid-19 is a wild spread global pandemic which have affected millions of people globally.
The spread of COVID-19 heavily interfered in my internship searching process as Nepal
government announced lockdown during the fourth week of March as a precautionary measure.
Due to this many company has applied the concept of ‘work from home’. In the third week of
September I got a job at Surya Nepal. My supervisor asked me to work from home from as the
company was following the strict precaution and has been working from home since the September,
Beginning of the pandemic.

The company operations are at halt that is why the major portion of my work was associated
with tax research. I was assigned to work on a research paper from home to support operational
work to the tax department due to which there was a lot of research to do during this lockdown.
However, due to the work from home culture, it enable more agility and flexibility in my working
arrangements. The internet has made it possible for me to be continually connected to the
supervisor. Tools such as Zoom have made communication much easier and at times can lead to
more efficient and effective meetings.

Covid not only has consequences at Surya Nepal, all of society is affected, affected millions
of people globally, which has led to dramatic changes in how businesses act and consumers behave.
At the point when we get to work in a similar office, it can cooperate with one another with no
restrictions. I know I would have learned so much more if it wasn’t for this pandemic, if it wasn’t
for work from home culture but now I have come to accept this new culture.

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 List of Abbreviations

BBA- Bachelors in Business Administration

EHS- Environment, Health & Safety
ITC- Indian Tobacco Company
ISO- International Organization for Standardization
KCM- Kathmandu College of Management
PMD- Primary Manufacturing Department
QUAS- Quality Assurance
SD- Standard Deviation
SNPL- Surya Nepal Private Limited
WFH- Work from Home

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 Table of Contents
Abstract 3
Acknowledgement 4
COVID-19 Pandemic effect at Surya Nepal 5
Chapter 1: Introduction 10
1. Company Profile 10
1.1 Mission 11
1.2 Vision and values 11
1.3 Strategies of company 11
1.4 Location 12
1.6 Capital structure 14
2. Organizational structure 15
2.1 Diagram of organizational structure 16
2.2 Job position 16
2.3 Job position in the company’s organizational chart 17
3. Intentions to join the company 17
4. SWOT analysis of SNPL 17
5. Objectives of this Co-operative study 20
Chapter 2: Co-op Studies Activities 21
2.1 Job Description and Responsibilities 21
2.2 Job Responsibilities and Job process diagram 21
2.3 Contributions as a Co-op student in the company 27
2.4. My Job Process Diagram 28
Chapter 3: Learning Process 29
3.1 Identification of Problems Encountering during the Internship 29
3.2 Identify how you successfully solved the problems. 29
3.3 Recommendation for the company 30
3.4 What have you learned from Co-op studies 30
3.5 Applying the knowledge from the coursework to the real-life working situation 31
3.6 Details of the related learning process and new knowledge student has received 31
Chapter 4: Conclusion 33
4.1 Summary of highlights of your Co-operative studies at SNPL 33
4.2 Self-assessment as a professional 33
4.3 Limitation of Co-operative studies 34

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4.4 Recommendation for the company 35
References 36
Annex 37
Basic Information 38

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Figure 1: SNPL Location ...............................................................................................................12
Figure 2: Different cigarette products of SNPL .............................................................................13
Figure 3: Safety Match “Tir” .........................................................................................................13
Figure 4: Mangaldeep Agarbatti ....................................................................................................14
Figure 5: Awards............................................................................................................................15
Figure 6: Organizational Structure.................................................................................................16
Figure 7: SWOT Analysis of SNPL Pvt. Ltd .................................................................................18
Figure 8: A Glimpse of the Factory ..............................................................................................37
Figure 9: Glimpse of Head office, Kathmandu ..............................................................................37
Figure 10: My visit to Pokhara Factory .........................................................................................37

Table 1: Summary of Job Process ..................................................................................................28

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 Chapter 1: Introduction
In this chapter, the background of SNPL is presented to provide the readers information.
The company profile, the organizational structure of the company, my motivation to choose this
company as my workplace for training, and company strategic analysis are included as follows:

1. Company Profile
An Indo-Nepal-UK joint challenge, Surya Nepal Private Limited
(SNPL) which commenced operations in Nepal in 1986 is now the
biggest non-public zone corporation in Nepal and a subsidiary of ITC
Limited, India. Their companies encompass production, sale and
distribution of cigarettes, matches, agarbatti and confectionery. Surya Nepal unfolds its enterprise
operations into garment zones with the motive of diversification. They commenced production of
clothes with leased capacities below the John Players label, for ITC Limites, India, in January
2004. They released the emblem for high-satisfaction and style in apparels inside an affordable
price. Surya Nepal Private Ltd was established with the Vision of “Growth through Quality and
Excellent”. It is officially referred to as Surya Tobacco Company. It is a joint challenge among
British American Tobacco (BAT) protecting 2%, ITC Limited 59% and Nepalese marketers
protecting 39% shares. It has its manufacturing facilities in Simara, Seratar and Biratnagar, with
the head office in Kathmandu. SNPL has given a brand new form to the domestic cigarette market.
The organization first of all began out its manufacturing with manufacturers of cigarette, Naulo
and Bijuli every of which has their own brand extensions. Surya is the very best promoting brand
in Nepal on the top rate section in which Khukuri is a popular brand. SNPL has over 70% to 75%
of the overall marketplace proportion of the cigarette enterprise in Nepal in terms of value. In the
top rate section it commands approximately 95% of the overall market share. In terms of brands
and income, its brands are the most sellable manufacturers in Nepal.

SNPL has the biggest and most powerful 2 distribution network coverage among all of the
FMCG companies in Nepal, covering throughout Nepal. 75000 retailers are served through 6000
secondary wholesalers and 60 entire distributors. SNPL brand stands for corporation ethos and the
ideals it holds true as a company. It reflects the company's passion for quality and excellence and
compelling vision to create enduring value for all its stakeholders. The mountain stands for SNPL
deep roots in Nepal, and connotes an experience of solidity and permanence, symbolic of its
position as the nation's foremost professionally controlled corporation. The rising sun stands for
leadership as well as corporate passion for excellence. It encapsulates the pioneering spirit that
inspires corporations to create and innovate products that adhere to the very best global

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requirements as well as create enduring value for its stakeholders. The sun additionally represents
the optimism that it feels for the future, and it's deep conviction that, through generating
employment, earning foreign exchange and through diverse CSR efforts, help create a better,
brighter tomorrow for everyone

1.1 Mission
To provide a superior sourcing solution to customers in order to build a long-term
competitive advantage. And to give all smokers of our brands, as well as consumers of other
tobacco products, a better smoking experience.

1.2 Vision and values

 To be a globally recognized multi-business organization in Nepal, satisfying global and
local consumers with a proud “Made in Nepal” logo and accounting for 2% of the country's GDP.

 To be a partner in national development and to provide long-term benefit for all

stakeholders

1.3 Strategies of company

Surya Nepal is a professional corporation governed by a board of directors that is dedicated
to create long-term value for the nation and its shareholders. It has a strong organizational culture
that is based on its basic principles of respect for individuals and belief in empowerment. Its overall
value generation concept is supported by excellent corporate governance policies and systems. Its
strategies are to foster competent and focused top management teams for each of the companies in
order to create distributed leadership inside the organization. Continuously enhance and develop
Corporate Governance processes and systems in order to accelerate management's entrepreneurial
energies by achieving a golden balance between executive freedom and the requirement for
effective control and accountability

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1.4 Location
SNPL is located at Kantipath, Kathmandu. It is situated in Bagmati Province,
Kathmandu Metropolitan City.

Figure 1: SNPL Location

1.5 Major Products of the company

Portfolio of Business
SNPL's business includes the manufacture of cigarettes, matches and agarbatti in Nepal
and the main manufacturing company in paying taxes. The total number of permanent employees
working in the tobacco department of the Simara factory of SNPL consists of 47 managers and
353 non-managers. Its business comprises manufacture, sale and distribution of cigarettes,
matches, agarbatti and confectionery.

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1.5.1 Cigarettes

Surya Nepal Pvt. Ltd. (SNPL) has been in the cigarette manufacturing business for over 25
years and has created successful brands such as Surya Legend, Surya 24 Carat, Surya Luxury
Kings, Shikhar Filter Kings, Khukuri Filter, Pilot, Bijuli, and Chautari to cater to a wide range of
consumer tastes and preferences.
As one of Nepal's largest FMCG companies, SNPL has a vast distribution network in the
nation for its products, which reach over 5000 whole sellers and over 100,000 retailers.

Figure 2: Different cigarette products of SNPL

1.5.2 Safety Matches

SNPL sells Safety matches purchased from third-party sellers. The Safety Matches
business combines SNPL's core capabilities in sales and distribution, brand creation, and supply
chain management to provide high-quality safety matches to Nepalese customers. The "Tir" Safety
matches effectively answer the requirement for a quality product in this business and have
successfully built a reputation for themselves.

Figure 3: Safety Match “Tir”

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1.5.3 Agarbatti

The goal of the company's strategy to enter the agarbatti sector is to provide job
opportunities in Nepal for the poorer sections of society. It is envisaged that SNPL's strong
distribution network would help in market penetration and enable the company to grab a
respectable share of the market. Access to ITC's Mangaldeep brand, product portfolio, and
technical understanding will provide SNPL with a competitive advantage. Mangaldeep agarbatti's
core proposition is to give people with a superb scent experience at cheap pricing. Mangaldeep's
portfolio includes products that are either floral, herb, or wood (Sandal) based fragrances, as well
as others that are fine scent.

Figure 4: Mangaldeep Agarbatti

1.6 Capital structure

The capital structure of SNPL is as follows:

1. Authorized capital 18,00,00,00,000

2. Issued capital, subscribed and paid-in capital 2,01,60,00,000

The share capital of the shareholders can be summarized as:

1. British American Tobacco (BAT) 2%

2. ITC 59%

3. Nepalese shareholders 39%

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1.7 Awards for the company

Figure 5: Awards

2. Organizational structure
An organization is a group of individuals who work together in a systematic and
coordinated manner to achieve one or more goals. A good organization is thus required to decrease
industrial complexity, cope with expanding competition, optimize resource usage, decrease labor
difficulties, fix authority and responsibility, ease administration, and inspire innovation. Any
organization's objectives must be clearly specified for the entire company, each department, and
even each job in the organizational hierarchy. There must be uniformity of aims so that all efforts
may be focused on accomplishing the established goals at the lowest possible cost. The
organization structure of SNPL is of functional type. The entire organizational activities are
divided into specific functions such as commercial, production, quality assurance, safety and

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security etc. Each functional area is assigned to a functional expert, who has the power to make all
decisions about the function anytime it is performed throughout the organization. Specialization,
effective control, efficiency, economy and facility of expansion are some of the advantages of this
type of organizational structure that led SNPL to adopt functional structure of the organization.

2.1 Diagram of organizational structure

Figure 6: Organizational Structure

2.2 Job position

In 14 weeks of internship tenure at SNPL, I was assigned as Researcher Intern in Tax
Department.

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2.3 Job position in the company’s organizational chart
Since I worked under Tax department, the picture below defines my position in the organization.
1. Vice President Finance

2. Finance Manager

3. Accountant

4. Trainee/Interns

3. Intentions to join the company

Being a BBA undergraduate in Finance & Banking, and with my experience in Bottlers
Nepal Ltd & Unilever Nepal Ltd (Reputed Multinational Companies), I was equipped with the
skills to gather relevant information from the financial sector, running payroll in SAP, preparing
reports and performing analysis. With good communication skills, I coordinate well with my co-
workers and my leadership skills assist the program in the best way possible. I always dreamt of
how it looks like working in a Surya Nepal, one of the reputed multinational company. Hearing a
lot of stories from my friends, I use to be fascinated about the working style, culture and corporate
settings. So, having all this since the very beginning, I joined ITC- Surya Nepal.

My secondary intention was to understand the corporate culture in such large structure and
to understand the success behind such multinationals. I also intended to join this company because
it’s a largest tax payer to Nepal government and thought will be a great exposure working in tax
department. Having said that, I thought I would get an opportunity to work with the best company
of the country. The major intentions to join Surya Nepal was to know how multinational companies
operate and function at Tax Department.

4. SWOT analysis of SNPL

SWOT analysis is a management activity in which managers assess organizational
strengths (S), weaknesses (W), as well as environmental opportunities (O) and threats (T). Once
the organization's resources have been identified, it must determine which of those resources are
valuable and reflect the organization's strengths and weaknesses

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 I STRENGHTS WEAKNESSES
N • Brand loyalty • Lack of great
T • Price distribution channel
E • few competitors • Delay in decision
R • Innovation making
N
A
L
E OPPORTUNITIES THREATS
X • launch of new brands • Monetary and Fiscal
T • New filter brands Policy
E • Premium • Competitors
R • Huge capital • WHO
N • Employee resistance
A
L

Figure 7: SWOT Analysis of SNPL Pvt. Ltd

Strengths
Old Company Being the nation's one of the oldest company in this field. It is producer of
the most popular brands of cigarettes in Nepal. Its popularity in the market has helped it gain the
largest share in the market.

 Brand Loyalty
As earlier mentioned about its market leadership, its quality has increased its popularity is
a tremendous consent which has boosted its brand loyalty to the greatest event in Nepal. Smoker of
other brands may shift to its products but it's rarely seen that its consumers shift to other products.
Habits die hard, like many of the consumers had said that they have health problems with switching
brand too.

 Price
It is seen that generally cigarette's price rise with time and quality. Satisfied consumers can
pay higher prices to the product. Surya is though gradually changing its prices but the sales is still
growing as it has the products for all the segments of the market.

 Few competitors
This Company is the market leader. However some of the competitor of its brands is JCF
(YAK) and NCF (MARLBORO).

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  Innovation
SPNL constantly pursue newer and better processes, products, services and management
practices. It will help the company to grab better and larger number of customers in the market.

Weaknesses
Distribution plays important role in the sales of products like cigarettes. Huge the
distribution channel lead to higher sales. So the company must have a great distribution channel.
The 20 retailers of Surya receive the products from the whole sellers or the daily sales service.
Though they are doing their work properly, there are creating constraints that are affecting the
distributions. These can be overcome only by using wide distribution channel as well as effective
daily sales services.

Opportunities
 Launch of new brands
Surya has a great market share in the cigarette segment it can easily introduce new brands
in the market according to the changing trends.

 New filter brands

Since the people are becoming more health conscious and the increasing preference of
filtered cigarettes, Surya can also launch different new quality cigarettes like cigar and
international brands in the market.

 Premium
Since it is the producer of the most sellable FMCG product in Nepal, it has high chance to
earn premium in the products as well as other new segments against its brand images.

 Huge capital
It is a joint venture company of Nepal and India, it has huge capital capacity which can be
very helpful in grabbing market opportunity.

Threats
 Monetary and Fiscal Policy
With the change in tax slabs every year, each brand is placed under different tax slabs
according to the cigarettes. So the prices of the brands are liable to increase and change every year.
This might result the consumers to switch into cheaper brands or even quit smoking.

 Competitors
Currently, the company enjoyed monopolistic leadership in the market, competing only

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with foreign brands. But due to the government's policy of liberalization and encouragement in the
private participation during the 80's new company started coming into the market.

 WHO
WHO has been working hard to raise public knowledge about the health risks linked with
cigarette smoking practices. This has significantly reduced the number of smokers.

 Employee resistance
Employees’ resistance and various trade unions’ activities can impose severe threat to
SNPL. For e.g. - the employees of SPNL stood on hunger strike after the official shut down of
garment factory of SNPL.

5. Objectives of this Co-operative study

The major objective of working in Surya Nepal was to know how multinational companies
operate and function at Tax Department. Some more objectives are segregated into:

1. To get an insight about the Income tax act of Nepal.

2. To help increase my knowledge, experience in General deduction.

3. To develop connections and build networks in the corporate world.

4. To learn about how big companies handle difficulties and come with solutions

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 Chapter 2: Co-op Studies Activities

2.1 Job Description and Responsibilities

Internship Role: Researcher (Intern)
Intern Worksite Location: Work from home, Tax Department, Kantipath, Kathmandu
Length of Internship: 14weeks
Internship Start Date: 15th September
Internship End Date: 10th January, 2021

Internship Description
I was assigned to work on a research paper to support operational work to the tax
department at Surya Nepal. So, my major focus area is to know about business expenses under
section 13 in income tax act Nepal to help execute strategies and operations smoothly for the tax
department. The intern is expected to perform tasks such as understanding company expenditures
and deductible expenditures, gaining a concept for claiming expenditures, learning the Nepal
Income Act law from the Inland Revenue Department, analyzing cases from different nations, and
comparing the Indian tax system. If the intern can demonstrate their eligibility in the required
areas, they will be eligible for further opportunities.

Under the supervision of Miss. Anushree Pande, I was assigned “Work from Home” as a
four-month research project with numerous goals to meet. The internship had various particular
aims that were full of learning, difficulties, and accomplishment for me, in addition to the general
purpose of acquainting me with the understanding of Income tax law.

2.2 Job Responsibilities and Job process diagram

The roles and responsibilities I had during my internship period at Surya Nepal are as
follows:

1. Studying various business expenses/ deduction related articles

During this period of the internship, I have studied various articles online in attempts to
understand the departments, and currently I am focusing on the Tax department, learning about
things to consider when itemizing deduction given under Section of 13-20 and how they are
processed, Inland Revenue Department gives me all the necessary information about Tax rules. I

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was able to get knowledge about other departments and Corporate law through interactions with
my supervisor and also with the help of other Websites and materials review, as required.

2. Understanding the business expenses, knowing the rules for claiming allowable of
Business Expenses and Illustration of how allowable Business Expenses Reduce Taxes
Payable
I was assigned to know and identify the expenses if the expenses may be deducted against
income to reduce the amount of tax payable. (Inland Revenue Authority of Singapore, 2021)
Allowable business expenses are expenses that can be claim as deduction against your business
revenue to reduce the amount of tax you have to pay.

By doing interactions with my supervisor, I understood the general rules for claiming
allowable of Business Expenses, which are:

1. Expenses must be related to business. It shouldn’t be under personal or private nature.

2. Expenses must be incurred in respective financial year.

3. Expenses should be supported by proper and complete source documents that should be
kept for at least five years to substantiate your claims.

Illustration

Business Revenue of XYZ company: NPR 80,00,000

Business Expenses: Total Business Expenses: NPR 30,00,000

Disallowable Business Expenses: NPR 20,00,000

Allowable Business Expenses: NPR 10,00,000

Income Subject to Tax: (80,00,000-10,00,000) Business Revenue-Allowable business

expenses.

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3. Understanding the concept of deducible
(Income Tax Act, 2058) Any person may, for the purpose of computing his income from
any business or investment in any income year, deduct the following expenditures related with the
transactions, subject to this Income Tax Act

1. Made in that income year,

2. Made by that year, and

3. Made in earning income from the business or investment

4. Keeping the track of expenses that may not be deducted

As an intern, I had to know about the expenses which cannot be deducted. By doing
research, I found out (Income Tax Act, 2058) ,

1. Expenses of domestic or personal nature,

2. Distribution of profits by any entity,

3. Political contributions

4. Professional certification, accreditation, and licensing fees

5. Professional reputation improvement expenses

6. Relief fund contributions

7. Rent payments

8. Residential telephone service

9. Stockholders' meeting attendance expenses

10. Tax penalty payments

11. Travel expenses for another person

12. Voluntary unemployment benefit fund contributions

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 13. Wages never received

5. Business Expenses Analysis

As an Intern, under researching I had to visit the website of Inland revenue of different
countries, I had to read the journals, articles, Supreme court cases in order to analyze the expenses.
I along with the help of my supervisor, I did various research on the following expenses:

1. Can Personal Expenses Be Shown as Business Expenses in Filing Income Tax?

2. Entertainment Expenses/ Donation/ Gift given
3. What are the tax implications of pension plans?
4. Whether expenditure on CSR activity is eligible for tax deduction under the Income Tax?
5. Dividends and "Double Taxation" is eligible for tax deduction under the Income Tax Act?
6. Are Business Loans Tax Deductible in Nepal?
7. Repair and Maintenance Expenses
8. Tax benefit for research and development
9. Depreciation and deduction under Income Tax Act
10. Tax rule for deducting business losses

6. Preparing comparison between Indian tax regime with Nepal’s.

6.1 Interest deduction

Nepal Section 14: We can deduct all interest due this year from the following liabilities
incurred by generating business income: If the liability was incurred through borrowing and that
amount was used in that year or used to purchase real estate in were used this year.

India Section 36: Deduction of interest for business or professional purposes is permitted
when calculating income under the heading “Profits and Profits for Business or Professional
Purposes”.

According to the provision of Section 36, the deduction of the interest on the capital
borrowed for the acquisition of a new asset is not permitted up to the point in time when the asset
is used, so that the interest corresponding to this period is capitalized.

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6.2 Allowance for cost of stock in trade
Nepal section 15: The amount spent on the purchase of trading shares is offset as expenses
for a trading company against the closing inventory value, which means that the only consumption
is allowed as a deduction.

India: The amount spent on the cost of manufacturing the goods sold is recognized as an
expense.

6.3 Pollution Expenses

Section 17 of Nepal: allows the deduction of pollution control costs to the extent incurred
in the operation of this business for that year.

Although the deductible cost capital is calculated in each fiscal year under this subsection,
it will not be more than fifty percent of the taxable. Taxable income of all companies operated by
this person.

Excess expenses or parts thereof that do not exceed the limit specified in paragraph 2 can
be capitalized and depreciated at the beginning.

6.4 Loss from Business or Investment

Nepal’s Section 20: For the purpose of calculating the income of a person from any
business or investment in any initial year, that person may deduct the loss incurred by any other
investment and not deducted that year, as well as the loss resulting from that person, or any other
investment, which has not been deducted in the past seven years. If someone received a full
corporate or capital income tax exemption in any income year, the loss incurred in that income
year will not carry over to the next tax year.

India’s Losses incurred under the "Business Income" heading that are not derived from
speculative transactions, unless adjusted with other income in the year of the loss, can only be
carried forward and offset by income from the "Business Income" heading. This loss can only be
carried forward for 8 years.
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The following losses are deductible from business income.
- Loss due to fluctuations in the exchange rate of the foreign currency held in the income
account.
- Loss of trading inventory due to destruction by an act of God
- Damage caused by theft or robbery on the factory premises during or after working
hours.

The following losses are not deductible from the operating income:
- Non-occupational damage caused by the expert.
- Damage caused by damage, destruction, etc of capital assets.
- Expected future losses.

6.5 Research and Development Costs

Nepal’s Section 18: Same as pollution expenses.

India’s Section 35: Scientific research relating to a company or class of company would
include:

- Any scientific research capable of conducting or facilitating expansion of that company

or all companies of that class; depending on

- Any scientific research of a medical nature which has a special connection with the
well-being of the workers employed in this company or with all companies of this class

- If the companies does scientific research of its own purpose i.e. business related then it
is given 100% of the expenditure (other than expenditure on land)

- If the companies does scientific research not for their own business but for the general
research for public let’s say, then government gives extra 50% i.e. 150% for motivation
purpose.

7. Cases Analysis
During this period of internship, under the guidance of supervisor I did a case study analysis

26
of India, United Kingdom and Nepal which required me to investigate and draw a conclusion
similarly on Nepal’s regime.

2.3 Contributions as a Co-op student in the company

As a KCM student, I was always involved in a wide variety of activities ranging from
finance to marketing to PR building. The contributions I have made to Surya Nepal are explained
below. During this time of internship, I studied various articles online to try to understand the tax
and research departments. I was focused on the Tax Department and learning what to consider
when listing the deduction given in Section 13-20 and how it is processed, the Internal Revenue
Department provides all the necessary information on tax regulations. Interacting with my manager
and using different web sites and reviewing materials as needed has given me perception into
different departments and company law. Eligible enterprise expenses are expenses that may be
deducted from enterprise profits to reduce the quantity of tax payable.

By interacting with my supervisor, I understood the general rules for claiming business
allowances. As an intern, during the research, I had to visit the Internal Revenue website of various
countries and read the Supreme Court cases, articles, and cases to analyze the spending. During
this internship, I did an analysis of a case study from India, UK and Nepal under the guidance of
the supervisor and forced me to do some research and come to a similar conclusion. I’m glad that
my research paper supported operational work for the tax department at Surya Nepal.

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2.4. My Job Process Diagram
I worked for 14 weeks at SNPL. The work process is divided as per the month wise and
has been explained in detail in above. From the above described, my job process diagram from
week 1 to week 14 is shown as follows:

Months Key Responsible Area

September 15th-October 15th Research about tax case laws of Nepal
October 16th-November 16th Determining Deductions under Income
act of Section 13-20, General and
special deduction
November 17th-December 18th Preparing comparison between Indian tax
regime with Nepal’s.
December 19th-Janurary 10th Drawing conclusion of Tax cases.

Table 1: Summary of Job Process

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 Chapter 3: Learning Process

This chapter contains the learning process used and knowledge acquired by the student
during the internship period.

3.1 Identification of Problems Encountering during the Internship

In the tenure of my internship at the company, I faced some challenges as an intern.
However, I tried my level best to address the problems. The problems I encountered during the
internship are explained briefly below:

COVID-19 Pandemic, The pandemic was the largest and the most unpredictable issue. I
encountered during my internship. It also created a barrier to internal and external communications.
Many tasks had to be postponed or delayed. As I am from Finance background, I was expecting to
get assigned in that department. However, as I wanted to challenge my limits. I decided to work on
a field different from mine. I faced difficulties in adjusting in my early days. Communication Gap
was another problem that I faced was the complexity of contact. There was a limitation on
cooperating with each other as we were not in the same workspace. In some activities particularly
those that are more collaborative, there is no substitute for face-to-face contact. Video conferencing
may be the solution sometimes, but it's not a complete substitute. Time management and Workload
imbalance, There would be a lot of work to do on some days and there would not be so many on
some. This would lead to high performance pressure on some days and on the other, too much
leisure. As there was interdepartmental work on certain tasks, there would be reliance on someone
else to complete a task to begin another task that would eventually lead to rushing on a lot of work.

3.2 Identify how you successfully solved the problems.

The problems raised by the COVID-19 pandemic were rather easy to overcome because of
the department I interned in. I could stay in constant contact with my supervisor through calls and
video calls. We would brainstorm ideas together via what’s app which helped to come up with
better results. It didn’t long for me to get used to the home style of work. Being in constant contact
with my supervisor helped me get accustomed to the new work environment. I tackled the problem
regarding time management and workload balance by finishing part of the work assigned which

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was not dependent on another person, Using leisure time to finish other tasks to ensure the other
day won't be too hectic.

3.3 Recommendation for the company

With reference to the preceding conclusions, the following recommendation can be made:

1. The company should frequently allow the intern to use software under the supervision of other
staff

2. The assigned supervisor should create an appropriate timetable for the interns based on the
work description.

3. Interns must be appropriately instructed for the required task rather than working
independently, which can aid the intern in learning and practicing efficiently.

4. Interns should be paid because they are also working.

3.4 What have you learned from Co-op studies

Every action is taken with the goal of achieving a certain goal in mind. The Co-op study
assisted us in understanding and analyzing how we should direct our efforts. It also helped in the
comprehension of the organizational environment and culture. The Co-op study permitted the
acquisition of skills and methods through real work scenarios directly related to the development
of a career in many areas. It essentially helped in answering the question of how to attain our
broader goal. Along with this, several minor and significant lessons were learnt, broadening the
intern's knowledge and bringing work maturity. As a consequence, throughout the fourteen weeks
of the internship, I obtained the most exposure to what it is like to work in real life, thanks to the
information gained from Co-Op courses. The Co-op program is beneficial.

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3.5 Applying the knowledge from the coursework to the real-life working situation
Throughout the three years, the learned outcomes assisted me in not only understanding
but also applying to real-life working situations, as some of the coursework such as – Professional
use of English, Organizational Management and research provided me with a fundamental
understanding of research methodologies and how the taxation process works. I was in Research,
it did not require in-depth knowledge of the courses I had taken in college, as anyone with good
communication and research skills could have completed the task assigned to me by the job
supervisor. However, my knowledge of the third-year research course made me recognize the
importance of working on a research paper to support operational work for the tax department.
However, the in-depth understanding of the course finance benefited me more in my previous
internships at Coca-Cola and Unilever but some of the course work like:

1. Professional use of English: It really helped me doing communication at work, writing mails,
agreements and contracts.

2. Organizational Management: This course help me to do management of time and

understanding work ethics

3. Research: My knowledge of the third-year research course made me recognize the importance
of working on a research paper to support operational work for the tax department at Surya
Nepal.

Working on several multinationals using the skills I gained from my degree work was a
wonderful experience for me.

3.6 Details of the related learning process and new knowledge student has received
One of the biggest learning for me was that things do not occur as per the set theories every
time. A theory remains the same everywhere for a particular situation however, practical learning
has a lot of external factors affecting it. Practical learning is subject to the people you’re learning
from or working from or the surrounding you are working in. I was also able to develop my
communication and interaction skills. There is a lot of difference between the college life and the
life of an employee. The first thing that is needed is socializing skills which can make us
successful. During the internship, I tried to know how the industry actually works. I also learnt to
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adjust myself in the office environment. There is a certain way to interact to people in the job. I
learned that public relations is a major component for businesses in Nepal so it is very important
to be able to maintain such relations.

In the short period of the first two weeks, I got the gist of how this company functions. Due
to COVID-19 the works had been affected a lot. However, the company was still involved in its
work. In order to complete assigned roles, I read a lot of articles related to taxation. I also went
through articles and books for tax procedures in Nepal. Also, I utilized my excel skills to prepare
comparison charts for research and development. Researching was an important skill I learned
during my internship. From studying Income tax rules and visiting websites to looking for other
countries laws. Finding new cases, analyzing facts and comparing with different countries,

Another learning for me was no matter what there is always something to learn. For
example: I thought I knew a lot of things and It made me realize never to under estimate anything
and always be willing to have an open mind to incorporate new knowledge and ideas which can
make be a better person both personally and professionally.

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 Chapter 4: Conclusion
This chapter includes the highlights of the co-op studies at SNPL, self-assessment,
limitation of the internship and the recommendation for the college.

4.1 Summary of highlights of your Co-operative studies at SNPL

My internship period of fourteen weeks provided me the wonderful opportunities to know
about the Surya Nepal Private Limited.

1. I learned the reality of a professional organizational setting. Most importantly, the

responsibilities, completion of tasks and importance of time management and developed
interpersonal and communication skills

2. Learning from such experienced and cooperative staff made my internship at SNPL more
manageable, and the I was able to develop and represent as a member of the Surya Nepal.

3. My contribution was in doing research about the deduction of UK, India and Nepal. This has
proven to be very helpful for the company.

4. Learned about the Company’s various products in Factory and how they are manufacture.

5. Recognized the significance of cooperation, coordination, and interconnection among a MNC

various departments for smooth operation

6. Learned how to reviewing journals, articles and communicate.

7. Familiarized with the institutional culture and values of the corporate world.

4.2 Self-assessment as a professional

Working at Surya Nepal furnished me with lots of possibilities to excel my expert skills
and construct my potential. I have been capable of recognize my self confidence and produce
something to the table. This internship made me revise my very own strength and weakness, which
enabled me to hone my strength further and turn my weaknesses into strength. I became capable
of understanding the fact that opportunities and chances are available around us if only we were
able to grab them at time and make right use out of them.
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 Internship opportunity is a splendid approach in assisting someone become a higher version
of themselves. This internship made me efficient in dealing with multiple ventures at a time. I
additionally found out how crucial it is to be broad-minded and accept your mistakes because at
the end we are all here to learn. Only this mind-set will assist us to move forward and create a
mark and give us a competitive aspect in the future.

In a nutshell, internship possibility is truly crucial for each business student to realize about
an organization and industry of self-interest to excel in future endeavors. I need to thank my
Supervisor and entire team at Surya Nepal for giving me this possibility of interning at their
esteemed premises.

4.3 Limitation of Co-operative studies

In and of itself, the internship opportunity offered by SNPL was a tremendous
accomplishment. However, an intern is unlikely to be able to cover everything in a short amount
of time. Despite the fact that there were numerous chances for internships available, and because
constraints are a component of any progressive system, there were a few restrictions. They are as
follows:

1. Fourteen weeks is insufficient time to learn a lot and get to know the firm well.

2. Interns are absolutely banned from getting access to the system

3. As a consequence of the SNPL's private policy for confidentiality preservation, restricted

access to various parts and information has decreased the scope of exposure in it.

4. Because the intern is only allowed to work in a few areas, only data from those departments is
available.

5. Given the pandemic scenario and the fact that I was working from home, it was difficult for
me to gather information from the appropriate individual.

6. This report does not describe how the manufacturing firm works in general, and it may not be
applicable to other companies of a similar sort.

7. Nonetheless, despite the restrictions indicated above, I tried my best to obtain appropriate

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 information from job supervisor and sincerely performed the job.

4.4 Recommendation for the company

Apart from the aforementioned recommendations given to the company, there are other
feedback the company can consider. I recommend the company to give or involve the interns in
some specific project so after the completion intern feel they have achieved some bigger and better
rather than just giving administrative works. Interns must be appropriately instructed for the
required task rather than working independently By, this company can boost the productivity of
the interns. And also give interns a salary as well, because they work just like everyone else and
this will push them to work more.

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 References

Cleartax. (2020). Income Tax Allowances and Deductions Allowed to Salaried Individuals. Retrieved from
https://cleartax.in/s/income-tax-allowances-and-deductions
Incometaxindia. (2020). About Us. Retrieved from https://www.incometaxindia.gov.in/pages/acts/income-tax-
act.aspx
 Annex

Figure 8: A Glimpse of the Factory

Figure 9: Glimpse of Head office, Kathmandu

Figure 10: My visit to Pokhara Factory

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 Basic Information

Name-Surname: Palak Singh Rathour

Student ID: 6008040061

Email: [email protected]

Department: BBA

Faculty: Finance and Banking

Address: Dhapasi, Kathmandu

Special Interests: Traveling, Cooking, Listening to music

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