New Delhi, March 16 -- The Central Board of Direct Taxes (CBDT) has issued a circular aimed at to offer guidance on the application of the Principal Purpose Test (PPT) provision under India's Double Taxation Avoidance Agreements (DTAAs).

In the clarification, the CBDT emphasised that the circular specifically addresses the PPT provision in Indian DTAAs where such a provision exists.

PPT is a provision used in international tax law, particularly in the context of Double Taxation Avoidance Agreements (DTAAs), to prevent tax treaty abuse. The PPT is designed to ensure that tax treaties are not used for artificial or contrived arrangements aimed at securing tax benefits without genuine economic substance.

It further clarified that the circ...