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India: Guidance for foreign companies, “place of effective management”

India: Foreign companies, place of effective management

India’s Central Board of Direct Taxes (CBDT) finalized guidance concerning the “place of effective management” standard and implications for foreign companies.

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Section 115JH of the Income-tax Act, 1961 provides, in part, that the central government may address exceptions, modifications, and approvals of the rules for computation of income, the treatment of unabsorbed depreciation, the application of loss carryforwards and offsets, and rules relating to tax collection. 

In 2017, the CBDT issued draft guidance providing such exceptions, modifications, and approvals. The final guidance reflects special transitional provisions for a foreign company that is deemed to be a resident in India on account of its place of effective management. This guidance has a retroactive effective date of 1 April 2017.

 

Read a June 2018 report [PDF 504 KB] prepared by the KPMG member firm in India that includes a table that compares the measures in the draft guidance to the rules provided in the final guidance

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