New Delhi: The Finance Ministry on Friday extended the deadline by a week till January 7 for receiving public comments on rules for determining the place of effective management of a company.For latest news on Business & Budget 2017, like us on Facebook and follow us on Twitter.
The Central Board of Direct Taxes (CBDT), last week, came out with draft guiding principles for determination of Place of Effective Management (PoEM) and had invited stakeholder comments on the same by January 2.
"Representations requesting for extension of the last day for submitting comments and suggestions, have been received and considered... The comments and suggestion on the above draft guidance may now be sent by January 9, 2016," the ministry said in a statement.
The draft PoEM guidelines have suggested two-stage process for determining the place of effective management of a company, with a view to assess its tax liability.
According to the draft guidelines, the first stage would be identification of the persons who make the key management and commercial decision for the company and secondly the determination of the place where these decisions are made.
The modification of the existing norms, it said, is necessary as many companies skip tax liability by misusing the guidelines.
Under the existing norms, many companies "artificially escape" the residential status under these provisions by shifting insignificant or isolated events related with control and management outside India.
The draft norms say PoEM would mean a place where key management and commercial decisions that are necessary for the conduct of a business or an entity as a whole are in substance made.
The draft norms also distinguish between active business outside India and passive income for the purpose of determination of PoEM.