The document discusses changes to section 6(3) of the Indian Income Tax Act of 1961 regarding determining residency of a company. A company will now be considered a resident of India if its place of effective management (POEM) is in India at any time during the year. POEM refers to where key management and commercial decisions necessary for conducting business are made. The changes aim to address shell companies controlled and managed from India but incorporated elsewhere. A two-stage process is outlined to identify POEM based on who makes decisions and where the decisions are made. Factors like board meeting locations, senior management locations, and main business activities are considered when POEM is not clearly defined.

1. (A NEW CONCEPT)

2. Earlier provision of section
6(3) of Income Tax Act, 1961

3. According to section 6(3)
A company is said to be resident in India in any
previous year, if:-
1. It is an Indian company; or
2. During that year, the control & management
of its affairs is situated wholly in India.

4. Which led to

5. Simply

6. CONCLUSION
THE COMPANY IS DECLARED
NON RESIDENT

7. According to section 6(3)
A company is said to be resident in India in any
previous year, if:-
1. It is an Indian company; or
2. During that year, the control & management
of its affairs is situated wholly in India.
2. Its Place of Effective Management, at any
time in that year, is in India.

8. Place of effective management
It means 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..
It is determined from year to year basis. That
means each year place of effective
management will be ascertained..

9. IT WILL BE A MEASURE TO
DEAL WITH CASES OF
CREATION OF SHELL
COMPANIES OUTSIDE
INDIA BUT BEING
CONTROLLED & MANAGED
FROM INDIA

10. COMPANY IS SAID TO BE
ENGAGED IN ACTIVE
BUSINESS OUTSIDE INDIA

11. PASSIVE INCOME TOTAL ASSETS
SITUATED IN INDIA
EMPLOYEES ARE
SITUATED OR RESIDENT
IN INDIA
PAYROLL EXPENSES ON
SUCH EMPLOYEES OF
ITS TOTAL PAYROLL
EXPENDITURE
TRANSACTIONS
WITH ASSOCIATED
ENTERPRISES
ROYALTY, DIVIDEND,
CAPITAL GAINS,
INTEREST & RENT

12. IN OTHER CASES

13. “POEM” IDENTIFIED IN 2 STAGES
1. Identification or ascertaining the person who are
responsible for decision making for the conduct of
company’s business
2. Determination of place where these decisions are in fact
being made.

14. BY HOLDING COMPANY SITUATED IN INDIA
PERSON RESIDENT IN INDIA
IF POWERS OF DECION MAKING IS
EXCERCISED
OR
“POEM”
IS IN
INDIA

15. LOCATION
COMPANY ITSELF
HANDLES THE
DECISIONS
PLACE WHERE
COMPANY HELDS
REGULAR BOARD
MEETINGS
COMPANY DELEGATES
THE AUTHORITY TO
SENIOR MANAGEMENT
PLACE WHERE THE
DECISIONS ARE
MADE BY SENIOR
MANAGEMENT

16. NOW A DAYS ITS NOT NECESSARY TO BE
PHYSICALLY PRESENT IN THE BOARD MEETING
TO TAKE DECISIONS

18. IN SUCH CASES
THE PLACE WHERE MAJORITY OF THE
DIRECTORS TAKE DECISIONS OR WHERE
MAJORITY OF THE DIRECTORS RESIDE WILL BE
THE “POEM” OF THE COMPANY..
IF ITS NOT CLEARLY DEFINED, THEN PLACE
WHERE MAIN & SUBSTANTIAL ACTIVITY IS
CARRIED OUT OR WHERE ACCOUNTING
RECORDS ARE KEPT WILL BE CONSIDERED.

19. THE END

20. THANK YOU……
KANIKA SINGH
singhkanika08@gmail.com