This circular provides clarification on the applicability of GST on services provided by the Asian Development Bank (ADB) and the International Finance Corporation (IFC).

The circular explains that both ADB and IFC enjoy statutory immunity from taxation under their respective Acts enacted by the Indian Parliament. The ADB Act, 1966 provides that the bank, its assets, income, operations, and transactions are exempt from all forms of taxation and customs duties, and it is not required to collect or pay any tax. It is also noted that this exemption had earlier been recognized under the service tax regime.

Similarly, the IFC Act, 1958 grants complete immunity to the Corporation in respect of taxation and customs duties on its assets, income, operations, and authorized transactions, and also absolves it from any obligation to collect or pay taxes.

The circular refers to a CESTAT Mumbai decision which held that where statutory enactments honoring international agreements grant immunity from taxation to an international organization, such immunity prevails over domestic tax provisions. Consequently, neither the service provider nor the service recipient can be subjected to tax in such cases.

Accordingly, it is clarified that services provided directly by ADB and IFC are exempt from GST under the provisions of the ADB Act, 1966 and the IFC Act, 1958. However, this exemption is limited strictly to services provided by ADB or IFC themselves and does not extend to services provided by any other entity appointed by, or working on behalf of, these organizations.