CBDT Guidelines On Determination Place Of Effective Management

Introduction

On January 24, 2017, the Central Board for Direct Taxes (hereinafter referred to as "CBDT") issued a circular enumerating the Guidelines for Determining the Place of Effective Management (hereinafter referred to as "POEM Guidelines") of a company¹. Section 6(3) of The Income Tax Act, 1961 (hereinafter referred to as the "IT Act") was amended by the Finance Act, 2015 and defines the term "Place of effective management" to mean a place where key management and commercial decisions that are necessary for the conduct of the business of an entity as a whole are in substance, made.

The amended definition was scheduled to come into effect from April 1, 2016 but The Finance Act, 2016, changed the effectiveness of the amendment to April 1, 2017 and hence, will apply to Assessment Year 2017-18 and subsequent assessment years.