Dr. Sanjiv Agarwal

While Service Tax is levied on almost services, barring few listed in negative list and exempted services, there are certain sectors which enjoy the special privileges.  Education is one such sector which enjoy privilege under Service Tax and rightly so. While services in relation to in school and pre-school education are not taxable at all, being in negative list, higher education as a part of a curriculum for obtaining a qualification recognized by law in India is also not taxable. Similarly, there is no Service Tax on any approved vocational course. There is also a specific exemption for services provided to educational institutions in respect of exempted education by way of renting of immovable property and auxiliary services.

It is however, important is bring out the difference between education and coaching or training as what is not taxable is only ‘education’ and ‘commercial coaching’ shall be liable to Service Tax. For example, if a student is studying for graduate course in commerce (B.com) in a college and also simultaneously pursuing coaching for law entrance exam, his B.com education is exempt from Service Tax but his law related coaching would attract Service Tax @ 12.36 percent. Similarly, only Indian courses are not taxable. Any foreign university course would attract Service Tax.

So far as exemption to education related auxiliary services and concerned, it means any services relating to imparting any skill, knowledge, education or development of course content or any other knowledge -enhancement activity, whether for the students or the faculty, or any other services which educational institutions ordinarily carry out themselves but may obtain as outsourced services from any other person, including services relating to admission to such institution, conduct of examination, catering for the students under any mid-day meals scheme sponsored by Government, or transportation of students, faculty or staff of such institution.

Owing to prevailing confusions amongst tax payers and rumors, Ministry of Finance has issued a clarification wherein taxability of various services provided to educational institutes has been clarified. There are many services provided to an educational institution. These are described as auxiliary education services and they have been defined in the exemption itself. Such services provided to an educational institution are exempt from Service Tax. For example, if a school or a college hires a bus from a transport operator in order to ferry students to and from school or college, the transport services provided by the transport operator to the school are exempt by virtue of the specific notification. Similarly, services in relation to hostels, house–keeping, security services, canteen etc shall be exempt from levy of Service Tax.

However, this exemption has a catch. These exemptions are available only for educational institutes and not for commercial coaching institutes. Thus, any coaching or training or tuitions aiding the education would not be able to enjoy this exemption.

Service Tax on Education services – clarification

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13 responses to “Clarification On Levy Of Service Tax on Education Related Services”

  1. gokulnath says:

    dear sir we are doing educational consultant we have received the payment from educational institutions for students admission that problem the service tax will come but the govt go it will come to exempted mega notification on 2012. what we do ple clarified

  2. Archana Chitlangia says:

    Mr. Amit Ji,

    w.e.f 11.07.2014, services provided to an educational institution by way of security services performed in such educational institution are exempt from service tax. Educational institution is also defined under clause 2(oa) of the N. No. 25/2012-ST dated 20.06.2012.

    Archana Chotlangia , ACA

  3. mr amit says:

    I am porvied security service in education ceritable trust run by collage . I am get the payment lum sum bill is not mensenswhat service tax. what exearly education examted . please adwase me

  4. Archana says:

    Dear Mr. Alpesh,

    This may be a case of export of service and in such a situation, service tax liability may not arise and you may not be liable to pay service tax. For export of service, all the conditions of Rule 6A of the Service Tax Rules, 1994 must be fulfilled which you should ensure. In the Instant case, it appears that Rule 3 shall apply and the POP will be the location of the service receiver which is outside India. In absence of full facts, you may look at the conditions of Rule 6A to be eligible for export of service and be guided accordingly.


    Archana Chitlangia

  5. Alpesh says:

    Dear Sir,

    I am providing online software training to the client residing in UK. In that case should I charge service tax to my client?

    Thanks in advance for your help!

    With Regards,

  6. Jeevan says:

    Whether service tax will be payable if school bus service fare Directly collected from students (not from school)

  7. Sanjiv Agarwal says:

    On mohit’s ji Query

    Generally the following provisions of service tax will apply in hotel industry –

    1) Exemption under N. No. 25/2012-ST dated 20.06.2012 – services by a hotel, inn, guest house, club or campsite for residential purpose having declared tariff below one thousand rupees per day or equivalent

    2) Abatement under N. No 26/2012-ST dated 20.06.2012- an abatement of 40% on renting of hotels etc. for residential / lodging purposes

    3) Reverse charge provisions under N. No. 30/2012-ST dated 20.06.2012 may be applicable on certain input services used in hotel

  8. Sanjiv Agarwal says:

    On Krishna’s ji query

    rate is 12.36%

  9. Krishna says:

    Dear Sir,
    I have a Educational society running upto 10th standard.
    we are lending a building on monthly basis.
    We have to pay any service tax for the building rent.
    what is the Percentage of tax to be payable?

    with regards

  10. mohit kumar says:

    Respected sir,

    I am going to open a new hotel (rooms only).
    what is the rules applicable on me of service tax and vat in haryana

    please help me


  11. sanjiv agarwal says:

    On Anand Jain’s query:
    Yes, it will be taxable.

    On Rajesh’s query :
    Much would depend on the contract. Please ellaborate your concern also.

  12. anand jain says:

    But what would be the consequences..? if the auxiliary & renting of immovable services provided by the education institute.? plz reply

  13. Rajesh says:

    Dear Sir,
    i have a small query if the educational institution is providing structured education to the students (for example anna salai university )through digitized format with the help of another private limited company. will the private company will be eligible for exemption?

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