The Central Board of Direct Taxes (CBDT) has issued a clarification regarding Circular 01/2025 (refer from here https://1-comply.com/2025/01/23/guidance-on-application-of-principal-purpose-test-ppt-under-indias-dtaas/), which was originally released on January 21, 2025, to provide guidance on the application of the Principal Purpose Test (PPT) provision under India’s Double Taxation Avoidance Agreements (DTAAs).

This clarification outlines the following points:

• The circular specifically applies to the PPT provision in Indian DTAAs where such a provision exists.
• It does not affect other DTAA provisions related to treaty entitlement or benefit denial.
• It does not interfere with domestic anti-abuse rules such as GAAR, SAAR, or judicial anti-abuse rules (JAAR). These continue to operate independently.
• No new legal interpretations are introduced. The clarification simply reaffirms that Circular 01/2025 focuses solely on the PPT without impacting other provisions of the Income-tax Act.