The Central Board of Direct Taxes recently issued a circular (No. 25 of 2017) on 23 October 2017. This circular clarifies that, as long as the regional headquarter operates for subsidiaries/group companies in a region, within the general and objective principles of global policy of the group as set forth by the parent company, and not being specific to any entity or group of entities, these activities of the regional headquarter in India alone would not constitute a basis for establishing the “place of effective management” for such subsidiaries / group companies.
The Place of Effective Management guidelines were issued in January 2017 as Circular No. 06 of 2017 and are used in relation to the determination of residence in India.
