1. Service Tax on Educational Institutions by Mr. Amit Gupta Introduction: There is no Service Tax Act in India till yet, but chapter V of The Finance Act 1994 provide 33 section ranging from sec 64 to sec 96 read with rules framed by central government covering provisions regarding service tax. Content: Provisions regarding Educational Institutions: a) Meaning of Service Sec 64B (44) b) Sec 66D (l) Negative List of Services c) Mega Exemption 25/2012 ( Entry no. 9) d) TAXATION OF SERVICES: AN EDUCATION GUIDE amitgupta25@outlook.com1

2. 2 MEANING OF SERVICE SEC 66B(44) Definition of service [Sec. 65b(44)] “Service means any activity carried out by a person for another for consideration ” 65B (37) "person" includes,–– (i) an individual, (ii) a Hindu undivided family, (iii) a company, (iv) a society,- DSEA & Rules 1973, Ch-IV (v) a limited liability partnership, (vi) a firm, (vii) an association of persons or body of individuals, whether incorporated or not, (viii) Government, (ix) a local authority, or (x) every artificial juridical person, not falling within any of the preceding sub-clauses Sec 67 Valuation of taxable service for charging service tax i)Consideration in money ii)Consideration not wholly or partly consisting of money iii)Consideration which is not ascertainable Students, faculty, staff

3. Sec 66D (l) Negative List of Services services by way of:- (i)pre-school education and education up to higher secondary school or equivalent; 3amitgupta25@outlook.com

4. (ii) education as a part of a curriculum for obtaining a qualification recognized by any law for the time being in force Education Guide 4.12.1 What is the meaning of ‘education as a part of curriculum for obtaining a qualification recognized by law ? It means that only such educational services are in the negative list as are related to delivery of education as ‘a part’ of the curriculum that has been prescribed for obtaining a qualification prescribed by law. It is important to understand that to be in the negative list the service should be delivered as part of curriculum. Conduct of degree courses by colleges, universities or institutions which lead grant of qualifications recognized by law would be covered. Training given by private coaching institutes would not be covered as such training does not lead to grant of a recognized qualification 4amitgupta25@outlook.com

5. (iii) education as a part of an approved vocational education course. (ITI) Industrial Training Institute A Modular Employable Skill Course (ITC) Industrial Training Centre Affiliated to the National Council for Vocational Training course run by an institute affiliated to the National Skill Development Corporation 5amitgupta25@outlook.com

6. Emphasis of matter amitgupta25@outlook.com6 School ( Educational institution )Staff, Faculty, Students Service provided Education, transportation, housekeeping, security, food etc. Entire gamut of services provided by school constitute and hence fall in negative list Natural Bundle Sec 66F(3)(a) Bundled Services : if various elements of a bundled service are Naturally Bundled in the ordinary course of business then it shall be treated as provision of a single service which gives such bundle its essential character.

7. Emphasis of matter cont… amitgupta25@outlook.com7 School ( Educational institution ) Service Provider AMC, Training etc. Whether these services are also exempt ?

8. Mega Exemption 25/2012 (Entry No.9) Services provided to or by an educational institution in respect of education exempted from service tax, by way of,- (a) auxiliary educational services; or (b) renting of immovable property Amended by Notification No. 06/2014 issued on 11 th july,2014 Concept of auxiliary educational services has been omitted from entry no. 9 and in its place specific services has been enlisted therein which will be exempt when received by the educational institution. 8amitgupta25@outlook.com

9. For entry 9, the following entry shall be substituted, namely:- Services provided,- (a) by an educational institution to its students, faculty and staff; (b) to an educational institution, by way of,- (i) transportation of students, faculty and staff; 9amitgupta25@outlook.com

10. (ii) catering, including any mid-day meals scheme sponsored by the Government; 10amitgupta25@outlook.com

11. (iii) security or cleaning or house-keeping services performed in such educational institution; 11amitgupta25@outlook.com

12. (iv) services relating to admission to, or conduct of examination by, such institution. 12amitgupta25@outlook.com

13. While these services are exempted from service tax, there are other critical auxiliary educational services offered by outside agencies — Annual Maintenance Contract(AMC) for the maintenance of sophisticated educational infrastructure used for teaching and research, Training activities provided to students and faculty to improve student employability and faculty standards and thirdly, (Now by issue of notification no. 06/2014 this service shall be taxable in the hands of service provider and therefore he shall collect ST @ 12.36% from the educational institutions and educational institutions added this amount of ST to cost of tuition fees or charge by any other name and charge from the parents of the students) Patent services that protect intellectual property. 13amitgupta25@outlook.com S.S. REKHI & CO.

14. Auxiliary Educational Services ( before issue of Notification no. 06/2014) amitgupta25@outlook.com14 Any service relating to Imparting any skill,knowledge,education or Development of course content or Any other knowledge-enhancement activity whether for the student or for the faculty Any other service which educational institution ordinarily carry out themselves but may obtain as outsourced services from any other person including services relating to Admission to such institute, 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;