Section 115JH of ITA, 1961 : Section 115Jh: Foreign Company Said To Be Resident In India

Explanation using Example

Imagine a foreign company, Luxe Electronics, which is incorporated in Germany. Traditionally, Luxe Electronics has been selling products to Indian customers through an independent distributor, and has never been considered a resident in India for tax purposes. However, in the financial year 2021-22, Luxe Electronics decided to set up a significant digital platform in India to directly sell its products, resulting in it having a place of effective management (POEM) in India. Consequently, for the financial year 2021-22, Luxe Electronics is deemed to be a resident in India for tax purposes.

Under Section 115JH(1) of the Income-tax Act, 1961, the Indian tax authorities allow Luxe Electronics to compute its total income and address other tax-related matters with certain exceptions, modific...

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