RESIDENTIAL STATUS OF A ‘COMPANY’ - Income Tax - Ready Reckoner - Income Tax

RESIDENTIAL STATUS OF A COMPANY An Indian Company is always Resident in India. A foreign Company is resident in India, only if, during the previous year, Place of effective management (POEM) is in India. Conversely, a Foreign Company is treated as Non-Resident if, during the previous year, place of effective Management (POEM) is outside India. A company can never be Ordinarily or not Ordinarily Resident in India. The Table given below highlights the same proposition : Place of Control Residential Status An Indian company A Company other than an Indian Company Place of effective Management of the affairs of a company is situated : In India Resident Resident Outside India Resident Non- Resident Explanation .-For the purposes of this clause place of effective management means a place where key management and commercial decisions that are necessary for the conduct of business of an entity as a whole are, in substance made. In case where Foreign Company is said to be resident due its POEM being in India u/s 6(3) in previous year, Notwithstanding anything contained in this Act, The provisions of the Act relating to computation of income, treatment of unabsorbed depreciation, set oof or carry forward and set off losses, collection and recovery and special provision relating to avoidance of tax shall apply to foreign company for the said previous year with exception, modification and adaptations specified. [Notification 29/2018, dated 22.06.2018] See: Circular no. 25/2017 dated 23-10-2017 , 8/2017 dated 23-2-2017 and 6/2017 dated 24-1-2017 RESIDENTIAL STATUS OF A COMPANY based on POEM