NEW DELHI: The revenue tax division has come out with a recent steerage be aware on applicability of Principal Purpose Test (PPT) for claiming tax treaty benefits, which is able to apply prospectively.
The Central Board of Direct Taxes (CBDT) in its be aware on principal function take a look at additionally clarified that the grandfathering provisions beneath the India-Cyprus DTAA, India-Mauritius DTAA and India-Singapore DTAA would stay outdoors the purview of the newly issued PPT provision.
India has made sure treaty-specific bilateral commitments within the type of grandfathering provisions within the DTAAs signed with Singapore, Mauritius and Cyprus.
“These commitments, as reflected in the bilaterally agreed object and purpose of such grandfathering provisions, are not intended to interact with the PPT provision as such,” CBDT identified.
The grandfathering provision in these treaties can be ruled by the precise provisions specified within the respective DTAAs.
