Table of Contents
1. How is the residential status of company determined?
A company is said to be a resident in any previous year, if
- It is a Indian company, or
- Its Place of Effective Management, in that year, is in India.
2. What is Place of Effective Management (POEM)?
- POEM is a place where the key management and commercial decisions which are necessary to conduct the business are undertaken.
- POEM guidelines will not apply to any company whose turnover is upto Rs. 50 crores in the previous year.
3. How is the place of effective management determined?
Place of effective management is deemed to be in India, if the company
- is not engaged in active business outside India and
- The majority of board meetings are held in India.
4. Can an Indian company be treated as a non-resident at any stage?
- No, Indian companies are always considered resident in India irrespective of where its control and management lies.
5. Can a company be classified as an “ordinarily” or “not ordinarily” resident?
- A company cannot be classified as an ordinary or not ordinary resident.
6. How is the residential status of a subsidiary company determined?
- The residential status of a subsidiary company is determined using the above mentioned procedures.
- It is not influenced by the residential status of its parent company. (I.e. The residential status of a subsidiary company should be determined separately).