Newsflash - Foreign companies having turnover of Rs. 50 crore or less kept outside the scope of POEM

Dear Sir / Madam,


We are pleased to share with you our newsflash on the captioned subject.


Starting from financial year 2016-17, the determination of residency of foreign company shall be on the basis of Place of Effective Management (POEM). Thus, a foreign company would be said to be resident in India in any previous year, if it is an Indian company or its Place of Effective Management (POEM)in that year is in India.


The final guiding principles for determination of POEM was issued by the CBDT  on 24 January 2017. On the same day, the Ministry of Finance sought to rationalize the scope of POEM by announcing that the POEM guidelines shall not apply to companies having turnover or gross receipts of Rs. 50 crore or less in a financial year. However, the final guidelines on POEM was silent on this issue.


To put the matter beyond doubt, the recent CBDT circular clarifies this aspect.

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