Clarification on Circular 01/2025 Regarding PPT Provision
CBDT press release Circular 01/2025 · 15 Mar 2025
Official title
CBDT issues clarification on Circular 01/2025
Official record
Open source pageSummary
Check the official recordWhat changed
The Central Board of Direct Taxes clarifies the scope of Circular 01/2025 regarding the Principal Purpose Test provision in India's Double Taxation Avoidance Agreements. The Circular applies only to the Principal Purpose Test provision in Indian Double Taxation Avoidance Agreements that contain this specific provision. It does not affect other provisions of the Double Taxation Avoidance Agreements. It does not interfere with domestic anti-abuse rules such as the General Anti-Abuse Rule, Specific Anti-Abuse Rules, or Judicial Anti-Abuse Rules. These domestic rules continue to operate independently. The clarification does not introduce new legal interpretations. It reaffirms that the Circular applies only to the Principal Purpose Test without impact on other provisions of the Income-tax Act.
Key dates
- Date of issuance of the clarification
- 15 Mar 2025
Who is affected
Document text
Government of India
Ministry of Finance
Department of Revenue
Central Board of Direct Taxes
New Delhi, 15th March, 2025
Press Release
CBDT issues clarification on Circular 01/2025
Circular No. 01/2025 dated 21.01.2025 was issued in the form of a guidance to provide clarity and certainty on the application of the Principal Purpose Test (PPT) provision under India’s Double Taxation Avoidance Agreements (DTAAs). In respect of this Circular, it is clarified that:
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The Circular seeks to provide guidance on the application of the PPT provision under India’s DTAAs, wherein such a provision exists. Therefore, this Circular shall apply to the PPT provision in only those Indian DTAAs wherein such a provision exists.
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The Circular is not intended to interfere or interact with any other provision of the Indian DTAAs, including such provisions that may be invoked for examination of treaty entitlement or denial of treaty benefits, other than the PPT.
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The Circular is not intended to interfere or interact with anti-abuse rules under the domestic law, such as General Anti-Abuse Rule (GAAR) and Specific Anti-Abuse Rules (SAAR), and Judicial Anti-Abuse Rules (JAAR) reflected in or resulting from judicial interpretations. Such rules shall continue to operate independently.
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This clarification does not introduce any new legal interpretation but reaffirms that the Circular applies only to the PPT without affecting other provisions of the Income-tax Act. The Government remains committed to ensuring consistency in tax law interpretation while upholding the existing legal framework.
(V. Rajitha)
Commissioner of Income Tax
(Media & Technical Policy) &
Official Spokesperson, CBDT
Source details
- Source
- Central Board of Direct Taxes / Income Tax Department
- Type
- press release
- Published by source
- 15 Mar 2025
- Document number
- Circular 01/2025
- Issuing division
- Central Board of Direct Taxes
- Coverage area
- direct-tax