Firms with sales below Rs 50 crore out of POEM rules

The income tax department on Friday clarified that the Place of Effective Management (POEM) rules that require foreign firms to pay taxes in India if the effective control is within the country.

Published: 25th February 2017 05:08 AM  |   Last Updated: 25th February 2017 05:08 AM   |  A+A-

By Express News Service

NEW DELHI: The income tax department on Friday clarified that the Place of Effective Management (POEM) rules that require foreign firms to pay taxes in India if the effective control is within the country, will not apply to companies with a turnover of Rs 50 crore or less in a financial year.

Last month, the tax department had come out with the POEM rules that will require foreign companies in India and Indian firms with overseas subsidiaries to pay local taxes based on where the business if effectively controlled.

The Central Board of Direct Taxes (CBDT) said the provision “shall not apply to a company having turnover or gross receipts of Rs 50 crore or less in a financial year”.

While issuing the POEM rules, CBDT had said the intent was to target shell companies and those which are created for retaining income outside India although real control and management of affairs are located in India.

According to Rakesh Nangia, managing partner of Nangia and Co, the circular intends to provide clarity that POEM can be invoked only in case of companies with a turnover of more than Rs 50 crore as the first circular did not clearly mention the threshold.

Amit Maheshwari, Partner, Ashok Maheshwary & Associates said the clarification is welcome as this was causingconfusion among taxpayers.



Comments

Disclaimer : We respect your thoughts and views! But we need to be judicious while moderating your comments. All the comments will be moderated by the newindianexpress.com editorial. Abstain from posting comments that are obscene, defamatory or inflammatory, and do not indulge in personal attacks. Try to avoid outside hyperlinks inside the comment. Help us delete comments that do not follow these guidelines.

The views expressed in comments published on newindianexpress.com are those of the comment writers alone. They do not represent the views or opinions of newindianexpress.com or its staff, nor do they represent the views or opinions of The New Indian Express Group, or any entity of, or affiliated with, The New Indian Express Group. newindianexpress.com reserves the right to take any or all comments down at any time.

flipboard facebook twitter whatsapp