Exemption from service tax to foreign missions/ consulates and to the personnel
At present ‘service specific exemptions’ are available to certain specified foreign missions/ consulates (vide notification Nos. 5/96-ST, 10/96-ST, 44/98-ST, 50/98-ST, 51/98-ST and 1/2001-ST), while for UN and other International Organizations a general exemption is available under Not. No.16/2002-ST. It was observed that the present service tax exemption scheme to foreign missions/ consulates and their personnel is selective and is not flexible enough to be useful for negotiations with other countries, to the extent of providing or modifying the tax concessions on reciprocal basis. It was also noted that a relatively flexible exemption system is available in respect of excisable goods vide serial No. 81 of Notification No. 6/2006-CE dated 1/3/06, and therefore, it may be preferable to modify the service tax exemption scheme in the same pattern.
And it has been decided to prescribe the scheme for service tax exemption in similar lines to the excise exemption, with required modifications.
Government has issued two notifications yesterday to exempt
1. all taxable services provided to foreign diplomatic missions or consular posts in India for their official use, and
2. all taxable services provided to diplomatic mission agents or career consular officers posted in a foreign diplomatic missions or consular posts in India for their personal use.
Of course the exemption comes with stringent conditions, certification, verification et all!
For the Diplomatic Mission:
1. Get a certificate of eligibility from the Protocol Division of the Ministry of External Affairs.
2. The Head of the Mission has to give a copy of that certificate to the Service Provider.
3. He should give an undertaking that the services are for use in his mission.
4. He should maintain an account of the undertakings issued, name, address, invoice number and registration number of the Service Provider.
For the Service Provider:
1. Mention the sl No. and date of the undertaking in the invoice.
2. Retain the documents given by the mission for verification.
Just imagine the number of audit paras after one year.
Consequently the earlier exemption notifications are rescinded.
Notification Nos 33, 34 and and letter from Commissioner, Service Tax.