Clarification for determination of Place of Effective Management (POEM) of a company, other than an Indian company

Notice Date : 23 February 2017

F. No. 142/11/2015-TPL
Government of India
Ministry of Finance
Department of Revenue
Central Board of Direct Taxes
Circular No 08 of 2017
Dated 23rd February, 2017

Subject: Clarification for determination of Place of Effective Management (POEM) of a company, other than an Indian company-reg.

The concept of POEM for deciding the residential status of a company, other than an Indian company, was introduced by the Finance Act, 2015. The existing provision of clause (ii) of sub section (3) of section 6 of the Income-tax Act, 1961 (the Act) shall come into effect from 1st April, 2017 and accordingly, applies to Assessment Year 2017-18 and subsequent years. Guiding Principles for determining POEM of a company were issued by Circular No. 6 of 2017 on 24th January, 2017. Press Release on POEM guidelines dated 24th January, 2017 has, inter alio, stated that the POEM guidelines shall not apply to a company having turnover or gross receipts of Rs. 50 crores or less in a financial year.

2. In view of above, it is clarified that existing provision of clause (ii) of sub section (3) of section 6 of the Act, shall not apply to a company having turnover or gross receipts of Rs. 50 crores or less in a financial year.

(Rajesh Kumar Kedia)
Director (Tax Policy & Legislation)

Copy to:-

1. The Chairman, Members and officers of the CBDT of the rank of Under Secretary and above
2. PS to the Revenue Secretary
3. AII Pr. Chief Commissioners of Income-tax & All Directors General of Income-tax with a request to bring to attention of all officers in their regions/ charges
4. Pr. Director General of Income Tax, NADT, Nagpur
5. Pr. DGIT (Systems)/ Pr. DGIT (Vigilance)/ Pr. DGIT (Admn)/ Pr. DGIT ( L&R)/
6. ADG (PR, Pi& OL), Mayur Bhawan, New Delhi for printing in the quarterly tax bulletin and for circulation as per usual mailing list (100 copies)
7. C&AG, New Delhi
8. Web Manager for uploading on www.incometaxindia.gov.in & placing in public domain
9. Data Base Cell for uploading on www.irsofficersonline.gov.in
10. Guard File

Director (Tax Policy & Legislation)