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Jan 23, 2025
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CBDT: No Lens on investments under old tax treaties
The Central Board of Direct Taxes (CBDT) has said that the Principal Purpose Test (PPT), which allows for deeper scrutiny of treaty benefits claimed by investors, will apply prospectively.
A guidance note issued by the country's apex direct taxes body clarified that past investments made under tax treaties with countries including Mauritius, Cyprus and Singapore will not be subject to PPT, bringing relief to investors.
The PPT, a globally accepted rule, aims to prevent large companies from avoiding taxes by scrutinising business arrangements that have been made purely for tax benefits as their main purpose.
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