On 22 June 2018, the Central Board of Direct Taxes (CBDT) has issued a final Notification No. 29/2018, dealing with special transitional provisions for a foreign company said to be a resident in India on account of Place of Effective Management (POEM). The notification deemed to come into force from 1 April 2017. The draft notification was issued on 15 June 2017.
Section 115JH of the Income-tax Act of 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 published a draft guidelines providing for such exemptions, changes and approvals. The final guide contains specific transitional provisions for a foreign company that is considered resident in India because of its place of effective management.
This guidance would be effective retroactively from 1 April 2017.
