• Apr
  • 23
  • 2012

Service Tax on Specified services relating to education

Specified services relating to education

The following services relating to education are specified in the negative list

•  pre-school education and education up to higher secondary school or equivalent

•  education as a part of a prescribed curriculum for obtaining a qualification recognized by law for the time being in force;

•  education as a part of an approved vocational education course

1 Are services provided by international schools giving international certifications like IB also covered in this Negative List?

Yes. Services by way of education up to higher secondary school or equivalent are covered in this entry.

2 Are services provided by boarding schools covered in Negative List?

Boarding schools provide service of education coupled with other services like providing dwelling units for residence and food. This may be a case of bundled services if the charges for education and lodging and boarding are inseparable. Their taxability will be determined in terms of the principles laid down in section 66F of the Act. Such services in the case of boarding schools are bundled in the ordinary course of business. Therefore the bundle of services will be treated as consisting entirely of such service which determines the dominant nature of such a bundle. In this case since dominant nature is determined by the service of education other dominant service of providing residential dwelling is also covered in a separate entry of the negative list, the entire bundle would be treated as a negative list service.

3 Are services provided to educational institutions also covered in Negative List?

No. Such services are not covered under the negative list entry. However certain services provided to educational institutions are separately exempted by a notification:

•  Services to an educational institution by way of catering under the centrally assisted mid-day meals scheme sponsored by government.

•  Transport to and fro such exempt institutes.

•  Services to or by an institution in relation to educational services, where the educational services are exempt from the levy of service tax, by way of services in relation to admission to such education.

4 Are private tuitions covered in the entry relating to education?

No. However, private tutors can avail the benefit of threshold exemption.

5 Are services provided by way of education as a part of a prescribed curriculum for obtaining a qualification recognized by a law of a foreign country covered in the negative list entry?

No. To be covered in the negative list a course should be recognized by an Indian law.

6 If a course in a college leads to dual qualification only one of which is recognized by law would the service provided by the college by way of such education be covered in Negative List entry?

Provision of dual qualifications is in the nature of two separate services as the curriculum and fees for each of such qualifications are prescribed separately. Service in respect of each qualification would, therefore, be assessed separately. If an artificial bundle of service is created by clubbing two courses together, only one of which leads to a qualification recognized by law, then by application of the rule of determination of taxability of a service which is not bundled in the ordinary course of business contained in section 66F of the Act it is liable to be treated as a course which attracts the highest liability of service tax. However incidental auxiliary courses provided by way of hobby classes or extra-curricular activities in furtherance of overall well being will be an example of naturally bundled course. One relevant consideration in such cases will be the amount of extra billing being done for the unrecognized component viz-a-viz the recognized course. For guidance on ‘bundled services’ please refer to  Taxability of bundled services under Service Tax

7 Are placement services provided to educational institutions for securing job placements for the students covered in this negative list entry?

No. Such services do not fall in the category of exempt services provided to educational institutions (please refer to point No. 3 above).

8 Are services of conducting admission tests for admission to colleges exempt?

Yes in case the educational institutions are providing qualification recognized by law for the time being in force (please refer to point No. 3 above).

9. In addition to the services specified in the negative list, which educational services are exempt if provided by a charitable organization?

Please refer to  Service Tax liability of registered charity on their activities & covered activities

10 What are the courses which would qualify as an approved vocational education courses?

Approved vocational education courses have been specified in section 65B of the Act. These are –

•  a course run by an industrial training institute or an industrial training centre affiliated to the National Council for Vocational Training, offering courses in designated trades as notified under the Apprentices Act, 1961(52 of 1961);

•  a Modular Employable Skill Course, approved by the National Council of Vocational Training, run by a person registered with the Directorate General of Employment and Training, Ministry of Labour and Employment, Government of India;

•  a course run by an institute affiliated to the National Skill Development Corporation set up by the Government of India.


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