Q. Principal Purpose Test (PPT) was seen in the news recently for:

[A] Determining the primary purpose of foreign investments in India’s real estate sector.

[B] Resolving disputes related to transfer pricing in multinational corporations.

[C] Assessing the environmental impact of large infrastructure projects.

[D] Preventing the misuse of tax treaties for tax avoidance and treaty shopping.

Answer: D
Notes:

Explanation – The PPT is an anti-abuse measure introduced in tax treaties under the Base Erosion and Profit Shifting (BEPS) framework to prevent treaty misuse. It denies treaty benefits if the primary purpose of a transaction is tax avoidance rather than genuine commercial reasons.

Source: The Hindu

Blog
Academy
Community