In January 2025, the Central Board of Direct Taxes (CBDT) issued a circular clarifying that the grandfathering provisions in the treaties are excluded from the scope of the Principal Purpose Test (PPT) provision.
On 15 March 2025, the CBDT issued a press release clarifying that the Circular applies only to the PPT in the Indian tax treaties and is not intended to interfere or interact with
(a) any other treaty provisions, including those related to treaty entitlement or the denial of treaty benefit, other than the PPT.
(b) anti-abuse provisions under the Income-tax Act, 1961, such as General Anti-Abuse Rule, Specific Anti-Abuse Rules, and Judicial Anti-Abuse Rules.
