Jun 28, 2018
India finally brings clarity on income tax computation for foreign firms
The government has notified rules for computation of income tax for foreign companies if they have place of effective management in the country. According to tax experts, it brings clarity on various aspects of the new place of effective management (POEM) regime.Central Board of Direct Taxes (CBDT) has notified a mechanism for calculation of written-down value, and computation of brought-forward loss and unabsorbed depreciation.It has said a company would continue to be treated as a foreign company even after it becomes resident in India."The notification has provided clarity to the foreign companies which shall be considered as a resident in India owing to its POEM being in India,” said Rakesh Nangia, managing partner at tax consultancyNSE 0.00 % Nangia Advisors LLP. “It provides guidance in case any conflict arises in the application of provisions of the Act to such foreign company qualifying as a resident company vis-à-vis a domestic resident company,” he said.