New Rates of Taxes for Indian Companies Under POEM

   Posted on 5th Jul 2017 12:28:27 in Tax Filing


A new notification has been issued for Indian residents covered under POEM norms. According to this recent announcement, any Indian resident or concerned entity under the new norms of POEM (Place of Effective Management) has to pay tax at 40% similar to the income tax applicable on foreign companies.

This rule is implemented on Indian MNCs having established an arm overseas to expand business or to raise funds. Foreign companies in the country outsourcing high-end functions also come under the rule. Central Board of Direct Taxes (CBDT) is inviting stakeholders’ comments on this new draft notification. The Board has already issued guidelines for entities to determine POEM.

Recent norms will deter the tax frame work that implies on entities with the obligation of POEM in India. Now, they have to evaluate the entire income, carry forward or set off loses, determine unabsorbed depreciation, collections, recovery, etc.

Special provisions are stated for the avoidance of tax. CBDT in the statement said that these transitional provisions will cover subsequent previous year to determine POEM.

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