CA Rajeev K Sharma

CA Rajeev K. SharmaServices provided by an educational institution (as defined) to its students, faculty and staff are exempt under clause (a) of Notification Number ST-25/2012 dated 20/06/2012.

All Services provided to an educational institution (as defined) were also exempt vide above notification number 25/2012 up to 11-07-2014.

But the scheme of exemption in relation to services provided to educational institutions was modified with effect from 11-07-2014 and scope of exemption for services provided to the Educational Institutions was curtailed to some specified services namely;

  1. transportation of students, faculty and staff
  2. catering, including any mid-day meals scheme sponsored by the Government;
  3. security services performed in such educational institution
  4. cleaning services performed in such educational institution
  5. house-keeping services performed in such educational institution
  6. services relating to admission to, or conduct of examination by, such institution.

With effect from 11-07-2014 not all but only above services mentioned from point 1 to point 6 are exempt if such services are provided to an educational institution.

It is to be noted that definition clause (oa) of the notification number ST-25/2012 dated 20/06/2012 as amended by Notification Number ST-09/2016 dated 01-03-2016 defines “educational institution” as

“educational institution” means an institution providing services by way of:

(i) pre-school education and education up to higher secondary school or equivalent;

(ii) education as a part of a curriculum for obtaining a qualification recognized by any law for the time being in force;

(iii) education as a part of an approved vocational education course;

Now, exemption even in respect of the above 6 services has been further curtailed, by Ministry of Finance (Department Of Revenue) vide Service Tax Notification No. 10/2017-Service Tax, dated 8th March, 2017 inserting the following proviso to clause (b) of the exemption notification ST-25/2012..

 “Provided that nothing contained in clause (b) of this entry shall apply to an educational institution other than an institution providing services by way of pre-school education and education up to higher secondary school or equivalent;”

This notification shall curtail presently available exemption via notification ST No 25/2012 dated 20/06/2012 to the effect that above services mentioned in point 1 to 6 provided to only SPECIFIED EDUCATIONAL INSTITUTIONS shall stay exempt and services mentioned in point 1 to 6 provided to OTHER THAN SPECIFIED EDUCATIONAL INSTITUTIONS shall become taxable.

The specified educational institutions are;

  1. Educational institutions providing services by way of pre-school education.
  2. Educational institutions providing education up to higher secondary school or equivalent.

Thus exemption from service tax (for the above services mention from point 1 to point 6)  provided to educational institutions providing education as a part of a curriculum for obtaining a qualification recognized by any law for the time being in force and providing education as a part of an approved vocational education course shall stand withdrawn from 1st of April, 2017.

Summarized position;

Exemption with respect to educational institutions under service tax with effect from 01-04-2017
Services provided by an educational institution
Services provided by an educational institution (as defined) to its students, faculty and staff if the educational institution provides

(i) pre-school education and education up to higher secondary school or equivalent;
(ii) education as a part of a curriculum for obtaining a qualification recognized by any law for the time being in force;
(iii) education as a part of an approved vocational education course;

Exempt
Services provided to an educational institution
Following specified services if provided To an educational institution being ->

Specified services namely; transportation of students, faculty and staff, catering, including any mid-day meals scheme sponsored by the Government; security services performed in such educational institution, cleaning services performed in such educational institution, house-keeping services performed in such educational institution, services relating to admission to, or conduct of examination by, such institution.

Institution providing pre-school education and education up to higher secondary school or equivalent; Exempt
 Non-specified services (other than those mentioned above) if provided To an educational institution being -> Institution providing pre-school education and education up to higher secondary school or equivalent; Taxable
ANY SERVICE provided

To an educational institution being ->

Institution OTHER THAN providing pre-school education and education up to higher secondary school or equivalent;

 

Taxable

W.e.f. 01-04-2017, exemption from service tax for services provided to educational institutions shall be restricted to the following services only;

1. If the services are Specified services namely; transportation of students, faculty and staff, catering, including any mid-day meals scheme sponsored by the Government; security services performed in such educational institution, cleaning services performed in such educational institution, house-keeping services performed in such educational institution, services relating to admission to, or conduct of examination by, such institution.

And

2. If the above services are provided to

a. Educational institutions providing services by way of pre-school education.

b. Educational institutions providing education up to higher secondary school or equivalent.

It is reiterated that services provided by an educational institution being (i) pre-school education and education up to higher secondary school or equivalent; (ii) education as a part of a curriculum for obtaining a qualification recognized by any law for the time being in force; (iii) education as a part of an approved vocational education course to its students, faculty and staff will stay exempt even after 1st of April, 2017.

(Author can be reached at  rks9814214503@gmail.com)

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14 responses to “Service Tax Exemptions for Educational Institutions from 1st April 2017”

  1. Sarfaraz says:

    Hi, Sir
    this is Sarfaraz,
    sir i want to know that i paid service tax on 30th of March there i made a mistake i have to pay service tax Rs.215385 but i have paid only 215136 and our trun over in F/Y 2016-17 is 4850122/- so what will be the interest amount on this can you tell me with calculation.

  2. Sweta says:

    Providing online library services to educational institutions for their students will be taxable?

  3. Pritesh Vaghela says:

    Notification 10/2017’s restriction is only for Entry 9 (b) of the original notification 25/2012 which means that services only in relation to “renting of immovable property ” will be taxable rest all will continue to be exempt even if provided by education institution other than those which are engaged in providing education for pre school or higher secondary school.
    Kindly clarify if I am wrong.

  4. Tilak raj says:

    I am in favour that all educational institutions should be exempted from service tax

  5. Rajesh says:

    Will the bus service provided by an engineering college to their students and faculty taxable under this new notification.
    Does the below mentioned point exempt an UG or PG college from paying service tax. We follow a curriculum prescribed by University, which finally leads to award of degree.

    (ii) education as a part of a curriculum for obtaining a qualification recognized by any law for the time being in force.

    Regards
    Rajesh

  6. unnikrishnan vasudevan says:

    Will the exemption be denied to an institution providing pre school classes alone?
    Similarly,only plus two classes?
    Wording gives an impression that exemption is oavailable if only all classes from pre school to higher secondary are provided..

    • CA Rajeev K Sharma says:

      If If the above services mentioned in Point 1 To Point 6 services are “PROVIDED TO” will stay.

      a. Educational institutions providing services by way of pre-school education.

      b. Educational institutions providing education up to higher secondary school or equivalent.
      EXEMPTION FOR SERVICES “PROVIDED BY” THE FOLLOWING WILL STAY
      i) pre-school education and education up to higher secondary school or equivalent;

      (ii) education as a part of a curriculum for obtaining a qualification recognized by any law for the time being in force;

      (iii) education as a part of an approved vocational education course;

      EXEMPTIONS FOR THE SERVICES FROM POINT 1 TO 6 PROVIDED TO THE SHALL BE AVAILABLE WEF 1.4.2017:

      (A) education as a part of a curriculum for obtaining a qualification recognized by any law for the time being in force;

      (B) education as a part of an approved vocational education course;

      – See

      • unnikrishnan says:

        Thanks.
        My point is whether the proviso restricts the scope of educational institution or not mentioned in main clause ?.Of course,the exemption is on all the 6 items of services only

        • CA Rajeev K Sharma says:

          The proviso restricts the scope of exemption available to service provisers of 6 types of services. Till 31 03 3017 these 6 services if provided to all types of institutions will be exemptand wef 142017 the exemption will be limited for services provided to pre nursery school and higher secondary school.

  7. veegee says:

    Well elucidated.

  8. GANDHI MOHAN BHARATI says:

    Higher Education is only for rich.
    Jai Ho pro poor Agenda !!!

  9. Venkatesh says:

    Sir very informative article. Does this mean all fees including tuition fees is liable to service tax. Kindly clarify in the interest of all.
    Regards

    • CA Rajeev K Sharma says:

      Fee charged by the following shall stay exempt:
      i) pre-school education and education up to higher secondary school or equivalent;

      (ii) education as a part of a curriculum for obtaining a qualification recognized by any law for the time being in force;

      (iii) education as a part of an approved vocational education course;

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