The Central Board of Direct Taxes (CBDT) on Wednesday issued a set of draft guidelines for determining the place of effective management (POEM) of companies for taxation purpose. The new rules are significant because if POEM of a firm with operations in India and abroad is considered to be in India, its tax liability in India could potentially rise. If POEM of a firm is in India, then its worldwide income — not just income from Indian operations — would be taxed here.

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