India has notified the entry into force of the protocol amending its 2013 income tax treaty with Sri Lanka, updating the treaty preamble and introducing a Principal Purpose Test (PPT) to address tax evasion, tax avoidance and treaty shopping.
India’s Ministry of Finance (Department of Revenue) has issued Notification No. 88/2026 on 16 July 2026, confirming that the Protocol amending the 2013 income tax treaty with Sri Lanka entered into force on 19 June 2026.
The amending protocol updates the preamble of the 2013 income tax treaty to emphasise the elimination of double taxation while preventing tax evasion, tax avoidance and treaty shopping.
It also replaces Article 28(6) with a Principal Purpose Test (PPT), allowing treaty benefits to be denied where obtaining those benefits was one of the principal purposes of an arrangement or transaction, unless granting the benefit is consistent with the object and purpose of the treaty.
It will apply to income derived in fiscal or taxable years beginning on or after 1 April following the calendar year in which it entered into force.
Earlier, the Parliament of Sri Lanka approved the protocol to the 2013 income tax treaty with India on 2 July 2025.
