Poem guidelines not applicable to companies with turnover or gross receipts up to Rs 50 crores. CBDT Circular No. 08 of 2017

Poem guidelines not applicable to companies with turnover or gross receipts up to Rs 50 crores 

Circular No 08 of 2017

F. No. 142/11/2015-TPL
Government of India
Ministry of Finance
Department of Revenue
Central Board of Direct Taxes

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 alia, 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 50 crores or less in a financial year.

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