PPT Guidance: CBDT Grandfathers Treaty Benefits - Mauritius, Singapore, Cyprus
By Rediff Money Desk, New Delhi Jan 22, 2025 17:21
India's CBDT clarifies PPT applicability for tax treaty benefits, grandfathering provisions for Mauritius, Singapore, and Cyprus remain unaffected. Read more.

Illustration: Dominic Xavier/Rediff.com
New Delhi, Jan 22 (PTI) The income tax department has come out with a fresh guidance note on applicability of Principal Purpose Test (PPT) for claiming tax treaty benefits, which will apply prospectively.
The Central Board of Direct Taxes (CBDT) in its guidance note on PPT also clarified that the grandfathering provisions under the India-Cyprus DTAA, India-Mauritius DTAA and India-Singapore DTAA would remain outside the purview of the newly issued PPT provision.
India has made certain treaty-specific bilateral commitments in the form of grandfathering provisions in 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," the CBDT said.
The grandfathering provision in these treaties would be governed by the specific provisions specified in the respective DTAAs.
Deloitte India, Partner, Rohinton Sidhwa said the circular clarifies various aspects for interpreting the PPT that has now been featured in most Indian tax DTAAs.
Most importantly, it establishes the primacy of the grandfathering article that features in some treaties, namely Cyprus, Mauritius and Singapore. Essentially, the circular protects such treaty-specific bilateral commitments and carves them out of the purview of the PPT provisions.
"This was a grey area when the new protocol was made public for the India Mauritius treaty. With this clarification there is a likelihood that the protocol would be notified and go into effect in the coming financial year beginning April 1, 2025," Sidhwa said.
Nangia Andersen LLP Partner Vishwas Panjiar said as per the guidance note, PPT provisions shall only apply prospectively and would also not be applicable in cases where India has entered into treaty-specific bilateral commitments in the form of grandfathering (like India's treaty with Cyprus, Mauritius, and Singapore).
"The guidelines also recognise and in fact nudges tax authorities to refer to BEPS Action Plan 6 as well as the UN Model Tax Convention (subject to India's reservation on specific matters) for supplementary source of guidance while deciding on the invocation and application of PPT provisions," Panjiar added.
The Central Board of Direct Taxes (CBDT) in its guidance note on PPT also clarified that the grandfathering provisions under the India-Cyprus DTAA, India-Mauritius DTAA and India-Singapore DTAA would remain outside the purview of the newly issued PPT provision.
India has made certain treaty-specific bilateral commitments in the form of grandfathering provisions in 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," the CBDT said.
The grandfathering provision in these treaties would be governed by the specific provisions specified in the respective DTAAs.
Deloitte India, Partner, Rohinton Sidhwa said the circular clarifies various aspects for interpreting the PPT that has now been featured in most Indian tax DTAAs.
Most importantly, it establishes the primacy of the grandfathering article that features in some treaties, namely Cyprus, Mauritius and Singapore. Essentially, the circular protects such treaty-specific bilateral commitments and carves them out of the purview of the PPT provisions.
"This was a grey area when the new protocol was made public for the India Mauritius treaty. With this clarification there is a likelihood that the protocol would be notified and go into effect in the coming financial year beginning April 1, 2025," Sidhwa said.
Nangia Andersen LLP Partner Vishwas Panjiar said as per the guidance note, PPT provisions shall only apply prospectively and would also not be applicable in cases where India has entered into treaty-specific bilateral commitments in the form of grandfathering (like India's treaty with Cyprus, Mauritius, and Singapore).
"The guidelines also recognise and in fact nudges tax authorities to refer to BEPS Action Plan 6 as well as the UN Model Tax Convention (subject to India's reservation on specific matters) for supplementary source of guidance while deciding on the invocation and application of PPT provisions," Panjiar added.
Source: PTI
Read More On:
DISCLAIMER - This article is from a syndicated feed. The original source is responsible for accuracy, views & content ownership. Views expressed may not reflect those of rediff.com India Limited.
You May Like To Read
TODAY'S MOST TRADED COMPANIES
- Company Name
- Price
- Volume
- Vodafone Idea L
- 9.47 (+ 2.05)
- 61048233
- Thinkink Picturez
- 0.45 ( 0.00)
- 22664084
- G G Engineering
- 1.22 ( -3.94)
- 18109205
- Srestha Finvest
- 0.69 ( -1.43)
- 12131937
- Hathway Cable & Data
- 14.75 ( -2.12)
- 11583833
MORE NEWS

Samsung India Workers Strike: Standoff...
A section of workers at the Samsung factory near Chennai continues their strike,...
VA Tech WABAG Wins Rs 3,251 Crore Sewage...
VA Tech WABAG secures a USD 371 million (Rs 3,251 crore) order for a 200 MLD...

Prestige Estates Plans Rs 30K Cr Housing Launch...
Prestige Estates to launch Rs 30,000 crore worth of housing projects in Q4 FY25,...