International taxation
This query is : Resolved
Vinod Kumar
(Querist)
29 May 2020
Please anyone tell me about POEM(place of effective management), PE(permanent establishment) and Business connection in India. What is difference between these three words and where, they are used ?
CA R SEETHARAMAN
(Expert)
29 May 2020
1 The place of effective management is the place where key management and commercial decisions that are necessary for the conduct of the enterprise's business are in substance made.
A foreign company would be resident in India in any previous year if its POEM in that year is in India.
2 A permanent establishment (PE) is a fixed place of business which generally gives rise to income or value-added tax liability in a particular jurisdiction.
3 Section 9 of IT Act: Broadly speaking, business income of a foreign company or other non-resident person is chargeable to tax to the extent it accrues or arises through a business connection in India or from any asset or source of income located in India, and to the extent such income is attributable to the operations carried out in India.
A foreign company would be resident in India in any previous year if its POEM in that year is in India.
2 A permanent establishment (PE) is a fixed place of business which generally gives rise to income or value-added tax liability in a particular jurisdiction.
3 Section 9 of IT Act: Broadly speaking, business income of a foreign company or other non-resident person is chargeable to tax to the extent it accrues or arises through a business connection in India or from any asset or source of income located in India, and to the extent such income is attributable to the operations carried out in India.
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