A company’s residence unquestionably depends upon its place of incorporation or registration. If a company is registered in India, that company’s residence is in India. Another criterion to prove residential status is its place of place of effective management (POEM), introduced in the budget 2015. According to this scale, if a company’s POEM is in India, the concerned company is a resident of India.
Importance of a resident company is that companies have to pay taxes in India if they have residence in India. Besides, the criteria for determination of residence of offshore companies become important in various circumstances involving majority ownership by Indian residents, including outbound investment structures by Indian business families and personal wealth/carried interest structures such as personal holding companies