Place of Effective Management provisions – section 6(3)

POEM Guidelines have been recently finalised only on 24th January, 2017, whereas the POEM provisions are already applicable w.e.f. 1st April 2016 (applicable from AY 2017-18 and onwards)

The Finance Act 2016, while deferring POEM by one year to be effective from AY 2017-18 onwards, also introduced section 115JH which gives power to CBDT to notify a transitory regime setting out the manner in which the provisions of Income Tax Act shall apply to companies whose POEM is held, for the first time, to be located in India as also to companies whose POEM is held to be in India during the course of assessment proceedings. CBDT is yet to notify this transitory regime.

The taxpayers must be given some time to arrange their affairs to comply with POEM Guidelines and also have clarity on transitory regime.


In light of the above, it is suggested that applicability of POEM should be deferred by a year (i.e. from A.Y. 2018-19 onwards).

Source-  ICAI Pre-Budget Memorandum–2018 (Direct Taxes and International Tax)
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