Central Board of Direct Taxes (CBDT) Guidance on PPT

The CBDT has issued a guidance note clarifying the application of the Principal Purpose Test (PPT) in relation to certain Double Taxation Avoidance Agreements (DTAAs).

Grandfathering Provisions

• The India-Cyprus, India-Mauritius, and India-Singapore DTAAs include grandfathering provisions.
• The grandfathering provisions are exempt from the newly issued PPT provision.
• These provisions represent treaty-specific bilateral commitments that do not interact with the PPT.
• The specific provisions of the respective DTAAs govern the grandfathering provisions.