Dr. Sanjiv Agarwal

Specified type of education are covered in negative list while certain other types of education services are covered for exemption under  mega exemption  Notification No. 25/2012-ST dated 20.06.2012. Both these provisions operate on a different footing on a strict legal interpretation.

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 recognised by law for the time being in force
  • Education as a part of an approved vocational education course.

Specified services provided to or by educational institutions are exempt. Subject to conditions, services provided to or by an educational institution in respect of education exempted from service tax by way of auxiliary educational services or renting of immovable property are exempt.

Auxiliary educational services 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 such institution. Exemption is available only in relation to services to or by educational institutions in respect of that education which is exempted from service tax.

However, w.e.f. 1.4.2013, there is a change in scope of exemption in relation to educational services as w.e.f. 1.4.2013, service ‘provided to’ educational  institutions shall only be exempt as against such services ‘provided to or by’ educational institutions which were exempt upto 31 March, 2013.

Therefore, exemption of services provided by an educational institution in respect of education exempted from service tax by way of auxiliary educational services or renting of immovable property will not be available w.e.f. 1.4.2013. The exemption by way of auxiliary education services and renting of immovable property to (and not by) educational institution in respect of education will continue.

 CBEC has also clarified that “exemption by way of auxiliary educational services and renting of immovable property by (and not to) specified educational institutes under S.No.9 will not be available w.e.f. 1.4.2013’.

Thus, effective April 1, 2013 if an educational institution provides educational auxiliary services to a non- educational institution, it will attract service tax.  There could be certain services which an educational institution provides to its own students or others who are non-educational institutes. Such services may attract service tax. However, in relation to services provided to its own students, there is utter confusion prevalent    in school managements which need to be removed. For example, where a school charges separately tuition fee, library fee, exam fee, sports fee etc, it may not be liable to service tax as school education is in the negative list. In such a case, we cannot say that tuition fee is free from service tax but other fees shall be liable to service tax. In fact, all such fees are part of school education and are part of one composite service ,ie, school education. The school education cannot be thought of without there being a library in school or exams or sport activities. Similarly, hostel  facilities  will also not attract service tax unless room rent is Rs 1000 per day or more. Generally, it is not so.  Canteen may also not be taxable as it only sells food stuff and do not provide facilities as restaurants do.

It is expected that schools and educational institutions shall comprehend the new provisions in right earnest and be clear on levy of service tax or otherwise.

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More Under Service Tax


  1. Ravi Ranjan says:

    Dear Mr. P.C.Gupta

    Shards University charging service tax on B.Tech Course is absolutely against the provision of law and is avoidable burden over students. Being an university its technical courses are covered under the definition of service covered by negative list.

    This is a complicated but crystal clear case, if you refer, UGC Act, AICTE Act, Honble Supreme Court judgement in a land mark judgement then things will got clarified. However please note if the course under the question is being provided under a collaboration with foreign university or under twining program with foreign university then the situation will be bit complicated and an in depth analysis is required to check the issue. You may contact me at 9810361854 for detailed discussion and clarification.



    Dear Mr. R M Garg

    Prima facie security services provided to an educational institution may not fall under auxiliary educational service and thus may not be exempt, however detailed checking is required to reach at conclusion.



  2. P. C. Gupta says:

    Very nice.

    Sharda University, G. Noida charges service tax on its fees for B. Tech course in last year. It is as per guidelines of Service tax act.

  3. R M GARG says:


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February 2024