What is POEM (Place of Effective Management) and why does it matter for CMAs?

POEM determines the residency of foreign companies for Indian tax purposes — if a foreign company's POEM is in India, it is taxed as an Indian resident on its global income. POEM is where key management and commercial decisions are substantively made. CMAs advising multinational clients must ensure that the foreign subsidiary's board meetings, strategic decisions, and senior management are genuinely based outside India — otherwise the company inadvertently becomes an Indian tax resident. CBDT has issued detailed POEM guidelines that are directly examinable.

What is the Equalisation Levy and when was it extended?

The Equalisation Levy was introduced in 2016 at 6% on digital advertising payments to non-resident companies. It was expanded in 2020 to cover all e-commerce supply or services by non-resident e-commerce operators at 2% of gross consideration. India's Equalisation Levy is part of the global digital economy taxation debate. However, as part of the OECD Pillar One agreement, India agreed to withdraw the expanded Equalisation Levy contingent on Pillar One implementation — the current status as of 2026 should be verified in the ICMAI exam notification.

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CMA Final Paper 15 — Direct Tax Laws and International Taxation

Direct Tax Laws and International Taxation is a 100-mark paper covering advanced income tax and international tax — the level at which CMAs advise on tax planning, cross-border structuring, and regulatory compliance in a global business context. For the December 2026 exam, Finance Act 2025 applies.

Advanced Direct Tax

Complex computation — Multi-source income, deduction stacking, capital gains with multiple exemptions, clubbing in complex family arrangements, PGBP for manufacturing companies (depreciation schedules, deferred tax)
Tax incentives — Section 80-IA/IB/IC/IE, Section 10AA (SEZ units), Section 35AD (infrastructure investment), weighted deductions for R&D
Business Reorganisation Tax — Tax neutrality for mergers (Section 72A carry-forward), demerger conditions, slump sale (Section 50B), itemised sale
Minimum Alternate Tax (MAT) — Section 115JB computation, MAT credit carry-forward, Ind AS MAT adjustments
Assessment, appeals and rectification — Faceless assessment, DRP (Dispute Resolution Panel), ITAT, High Court, Supreme Court tax litigation
Penalties and prosecution — Section 271 (concealment), Section 276C (wilful evasion)

International Taxation

Residential status — Indian company, foreign company, POEM (Place of Effective Management) for non-residents
DTAA — OECD/UN model article-wise analysis: PE (Article 5), Business Profits (7), Dividends (10), Interest (11), Royalties (12), Capital Gains (13), Independent Personal Services (14), Employment (15), Directors' fees (16)
Transfer Pricing — Arm's length standard, all six methods (CUP, RPM, CPM, TNMM, PSM, Other), documentation requirements (Master File, Local File, CbCR), APA, MAP, Safe Harbour Rules
GAAR — Sections 95–102, impermissible avoidance arrangement, commercial substance test, GAAR Panel
BEPS — Key Actions and MLI (Multilateral Instrument), India's MLI positions, BEPS Action 1 (Digital economy — Significant Economic Presence), Action 13 (CbCR)
Equalisation Levy — Section 165/165A, scope, rate, applicable transactions, non-resident e-commerce
Black Money Act 2015 — Undisclosed foreign assets and income, penalties, prosecution

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CMA Final Paper 15 — Direct Tax Laws and International Taxation

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International Taxation

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