Residential Status Of A ' Company '- [Section

6(3)]
Section 6(3)(i) : Indian Company
Always Resident in India.

An Indian company is always resident in India. Even if an Indian company is

controlled from a place located outside India (or even if shareholders of an
Indian company controlling more than 51 per cent voting power are non-
resident and/or located outside India), the Indian company is resident in India.
An Indian company can never be non-resident.

Section 6(3)(ii) : A Foreign Company (whose

turnover/gross It will be resident in India if its place
of effective receipt in the previous year is more
than management (POEM), during the relevant
previous Rs. 50 crore)
It will be resident in India if its place of effective management (POEM),
during the relevant previous year, is in India

A foreign company (with effect from the assessment year 2017-18) is resident
in India if its place of effective management (POEM), during the relevant
previous year, is in India. For this purpose, the place of effective management
means a place where key management and commercial decisions that are
necessary for the conduct of the business of an entity as a whole are, in
substance made. For this purpose, a set of guiding principles (to be followed
in determination of POEM) have been issued by the Board in Circular No.
6/2017, dated January 24, 2017.
Section 6(3)(iii) : A Foreign Company (whose
turnover/gross Always Non-Resident in India [Note
3] receipt in the previous year is Rs. 50 crore or
less)
Always Non-Resident in India

Provisions of section 6(3)(ii) shall not apply to a foreign company having

turnover or gross receipts of Rs. 50 crore or less in a financial year – Circular
No. 8/2017, dated February 23, 2017. In other words, a foreign company
(whose annual turnover/gross receipts is Rs. 50 crore or less) cannot be
resident in India from the assessment year 2017-18 onwards.
Residential Status of a Company is determined as follows a Table Format.

Section Company Residential Status

6(3)(i) Indian Company
6(3)(ii) A foreign company (whose
turnover/gross receipt in the
previous year is more than Rs. 50
crore)
Always Resident in India
It will be resident in India if its
place of effective management
(POEM), during the relevant
previous year, is in India.
6(3)(ii) A foreign company (whose Always non-resident in India
turnover/gross receipt in the
previous year is Rs. 50 crore or less)