Dr. Sanjiv Agarwal, FCA, FCS
Vide Notification No, 9/2016-ST dated 1.3.2016, w.e.f. 1.3.2016, following services provided by Indian Institutes of Management (IIMs) shall be exempt –
“Services provided by the Indian Institutes of Management, as per the guidelines of the Central Government, to their students, by way of the following educational programmes, except Executive Development Programme, –
a) two year full time residential Post Graduate Programmes in Management for the Post Graduate Diploma in Management, to which admissions are made on the basis of Common Admission Test (CAT), conducted by Indian Institute of Management;
b) fellow programme in Management;
c) five year integrated programme in Management.”
In India, IIMs are premier Institutes providing management education to students. Following educational programmes offered to students shall be exempt from levy of Service Tax –
i) Two year full time residential post graduate programme in management leading to postgraduate diploma on management (PGDM) for which admissions are done on the basis of all India Common Admission Test (CAT).
ii) Fellow education programme on management
iii) Five year integrated programme in management leading to dual degrees / diploma (undergraduate + post graduate)
All such IIMs also offer executive development programmes (EDPs) to experienced management / business executives which will not be eligible for exemption as the users are not students. Such programmes could be called by any other name but shall not be exempt.
Exemption to above educational programs is clarificatory in nature because post-graduate programs in management and fellowship programs are equivalent to the MBA and Ph.D degrees, respectively, which get covered under education as a part of a curriculum for obtaining a qualification recognized by law. Consequently, there shall be no liability to pay service tax in respect of said programs for the past period also.
CBEC has clarified vide letter DOF No. 334/8/2016-TRU dated 29.02.2016 as follows –
“Services provided by the Indian Institutes of Management (IIM) by way of 2 year full time Post Graduate Programme in Management(PGPM) (other than executive development programme), admissions to which are made through Common Admission Test conducted by IIMs, 5 year Integrated Programme in Management and Fellowship Programme in Management are being exempted from service tax.
It has been informed by Secretary, Ministry of Human Resource Development (MHRD) vide letter D. O. No.2-14/2009-TS.V dated 8th July, 2014 and 5th February, 2014 that MHRD is vested with the power to recognise educational courses [DoPT O.M. dated 08.01.1975], for the purpose of recruitment to posts under Government of India. It has been further stated by MHRD in their above mentioned letters that IIMs have been conducting Post Graduate Programmes in Management and Fellowship Programmes which are equivalent to MBA and Ph.D degrees. It has been reiterated by Secretary, MHRD vide letter D.O. 3/5/2013-TS.V dated 15.1.2016 that the IIMs have been conducting Post Graduate Programmes in Management and Fellowship Programmes which are equivalent to MBA and Ph.D degrees, respectively, (as also clarified by associations like Association of Indian Universities, Inter –University Board of India etc.). In view of this, the exemption being given to the above programmes of IIMs is clarificatory in nature and in view of the same, liability to pay service tax in respect of the said programmes for the past period will also become infructuous. (New entry at S. No. 9B of notification No. 25/2012-ST refers)”