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 variou