Service Tax Exemption to Services provided by Indian Institutes of Management
Indian Institute of Management is known to be the highly recognised institution, known for its management education and research in India.
Indian Institute of Management is known to be the highly recognised institution, known for its management education and research in India. They primarily offer postgraduate, doctoral and executive education programs in the field of business administration and management. This is counted in one of the top business schools, providing best quality of education services in the area of management in the country .
Notification No. 25/2012-ST exempted services provided to or by an educational institution, with intent to remove the burden of Service Tax from education sector. In order to expand immunity provided to educational services from Service Tax levy, an additional change has been introduced vide Notification No. 9/2016-ST dated 01.03.2016 to the former Notification. The new Notification 9/2016 includes the services provided by the IIM’s to the list of exempted services. Services provided by the Indian Institutes of Management (IIM) by way of 2 year full time Post Graduate Program in Management (PGPM) (other than executive development Program), admissions to which are made through Common Admission Test (CAT) conducted by IIMs throughout the country, 5 year Integrated Program in Management and Fellowship Program in Management are declared to be exempted from Service Tax levy. The new Notification donot cover executive development Program, therefore it likely will continue to be taxable.
It has been informed by letter of the Secretary, Ministry of Human Resource Development (MHRD) vide D.O. No. 2-14/2009-TS.V dated 08.07.2014 and 05.02.2014 that MHRD is vested with the power to recognise educational courses, for the purpose of recruitment to posts under Government of India. It has been further stated in the MHRD letters that IIMs have been conducting Post Graduate Programs in Management and Fellowship Programs, which are equivalent to MBA and Ph.D degrees.
It has been again reiterated by Secretary, MHRD vide their letter D.O. 3/5/2013-TS.V dated 15.01.2016 that the IIMs have been conducting Post Graduate Programs in Management and Fellowship Programs 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.). Thereby qualifying services from IIM, to fall in the category of educational services which are eligible to be considered for the exemption from 01.03.2016.
The said exemption to the above Programs run by IIMs is clarificatory in nature and thus, the liability to pay Service Tax in respect of he said Programs for the past period will also become infructuous. Therefore the Government has made a strong positive attempt to remove the burden of Service Tax from the education services provided by the IIM’s, with effect from 01.03.2016
Contributed by Ms Ruhi Jhota:
Ruhi is an Advocate and practicing in Indirect Taxes. She possesses strong research background which is required to present the complexity of taxation in terms that a layman can understand.
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