Amendment in entry no. 9 of Mega Exemption Notification No. 25/2012-ST dated 20.06.2012 (as amended from time to time): Entry No. 9 of Mega Exemption Notification No. 25/2012 is related to services provided by/received by educational institutions. It reads as under:

9. Services provided,-

(a) By an educational institution to its student, faculty and staff;

(b) To an educational institution, by way of,-

(i) Transportation of student, faculty and staff;

(ii) catering, including any mid-day meals scheme sponsored by the Government;

(iii) security or cleaning or house-keeping services performed in such educational institution;

(iv) services relating to admission to, or conduct of examination by, such institution;

The entry exempts all the services provided by an educational institution to its students, faculty and staff.

Further, this entry exempts some specified services provided by any person to the educational institution, viz, transportation of student, faculty and staff, catering and mid day meal, security or cleaning or house-keeping services and services relating to admission to, or conduct of examination.

This entry has been amended by the Government vide notification number 10/2017-ST dated 08.03.2017. The amendment will be effective from 01.04.2017.

A proviso has been inserted in entry number (9) after sub-clause (iv) in clause (b) which reads as under:

“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;”.

Therefore, w.e.f. 01.04.2017 entry number 9 of notification no. 25/2012 as amended from time to time will be read as under:

9. Services provided,-

(a) By an educational institution to its student, faculty and staff;

(b) To an educational institution, by way of,-

(i) Transportation of student, faculty and staff;

(ii) catering, including any mid-day meals scheme sponsored by the Government;

(iii) security or cleaning or house-keeping services performed in such educational institution;

(iv) services relating to admission to, or conduct of examination by, such institution;

“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 will affect the educational institutions adversely. Now the education institution other than institution providing pre-school education and education up to higher secondary school or equivalent will have to pay service tax on all the services received. Therefore, any person providing services of transportation of student, faculty and staff, catering and mid day meal, security or cleaning or house-keeping services and services relating to admission to, or conduct of examination to education institution other than institution providing pre-school education and education up to higher secondary school or equivalent will charge service tax on its invoices and the educational institution will have to pay service tax on the same. Any service received by educational institution providing education of graduation, post graduation, course for obtaining degree by any law or any other approved vocational education course will be chargeable to service tax w.e.f. 01.04.2017.

For the purpose of entry no. 9, education 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 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

This will increase the cost of providing education by the educational institutions and the same will be charged ultimately from the students which will put burden on the pockets of the students and their parents. However the position for the educational institutions providing education to students upto 12th Standard will still be the same as earlier and there will be no additional burden of service tax on the parents of children getting education upto 12th Standard.

CA Vineet Rathi About Author: CA Vineet Rathi, ACA, DISA (ICAI), LL.B., M.Com, Chairman CICASA of Ghaziabad Branch of CIRC of ICAI (2017-18), Mobile : 9717724704, E.Mail : cavineetrathi@gmail.com

Author is Practicing and dealing in various areas, viz, Income Tax, Service Tax, Audit, ROC etc. Handling service tax appeals upto CESTAT level. Former Visiting faculty of ICAI of CA Final Students as well as orientation and GMCS classes of CA students conducted by ICAI.

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One response to “Partial withdrawal of Service Tax exemption provided to Educational Institutions”

  1. CA. P. K. Jain says:

    As I know higher secondary means class 10th.
    Class 12 is called as senior secondary class.
    Please clarify this terminology.

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