CBDT clarifies tax treaty exemptions for investors' reassurance

India's Central Board of Direct Taxes (CBDT) has clarified that exemptions from the Principal Purpose Test (PPT) in certain tax treaties will not affect domestic anti-abuse rules. This reassures investors that past investments will not be re-evaluated. The clarification follows amendments to the tax treaty with Mauritius in April 2024, which included the PPT. The PPT aims to prevent tax avoidance by scrutinizing business arrangements made solely for tax benefits. Previously, there were concerns that the exemptions could lead to ongoing tax abuse investigations. The CBDT's recent statement aims to provide clarity and consistency in tax law interpretation, addressing investor apprehensions.