CONSEQUENCES

• Filing of FCO’s regular income-tax returns in India.
• Global incomes will be taxable in India. FCO’s have to pay advance tax and self-assessment tax as applicable.
• FCO’s will have to maintain regular books of accounts, vouchers and documents like any other Indian resident companies.
• FCO’s have to obtain TAN and comply with TDS requirements.
• Companies will have to get their accounts audited.
• Various other provisions will be applicable as if it is applicable to resident Companies .
• Guidelines is silent on consequence for FCO on being resident of India
• Sec 115JH provides for transition relief to FCO and requisite notification is awaited clarifying method of computation of income, treatment of unabsorbed depreciation, set off or carry forward and setoff of losses, special provision relating to avoidance of tax and the collection and recovery of taxes shall apply in a case where a foreign company is said to be resident in India due to its POEM being in India for the first time
• However Companies considered to be resident under POEM on safer side should initiate applicable compliance
• In case of Dual residency under tie breaker rule, Company is resident as per POEM. Article 3(2) Indian POEM rule will apply – Acceptability of domestic rule may be under Question