Education under Negative Era
The
new service tax law levied service tax on all fields of education except which
is: -
1.
Specifically
covered under negative list and,
2.
Exempted by way
of notification.
1.
Education Covered
under Negative List
1)
Pre-school education
and education up to higher secondary school or equivalent
(Pre-school
education includes nursery school, day care centre, play group, reception
class, etc. and Education up to higher secondary school i.e. Education up to 12th
Class)
2)
Education as a
part of a curriculum for obtaining a qualification recognised by any law. (Conduct
of degree courses by colleges, institutions or universities which lead to grant
of qualifications recognised by law would be covered)
3)
Education a part
of an approved vocational education course (VEC).
Services
provided by Boarding Schools
Boarding schools provide service of
education coupled with other services like providing dwelling units for
residence and food. Their taxability will be determined as follows:-
1.
If the charges
for education and lodging and boarding are inseparable – Such services
in the case of boarding schools are bundled in the ordinary course of business.
Therefore the bundled of services will be treated as consisting entirely of
such service which determines the dominant nature of such bundle. In this
case the dominant nature is service of education so the entire bundle would be
treated as Negative List service.
2.
If the charges
for education and lodging and boarding are Separable – In such kind of
services following provisions may apply:
1)
Where services
are provided with dwelling units for residence only – If only
accommodation facility is provided in a hostel, then such services are covered
under negative list.
2)
Where services
are provided with dwelling units for residence and food – This may be a
case of bundled services if charges for lodging and boarding are inseparable.
In this case, the dominant nature is service of resident dwelling, which is
covered in a separate entry of negative list, so entire bundle would be treated
as a negative list service.
3)
Where only
Mess/Canteen Facility is provided – A Mess or Canteen established by
educational institute may claim exemption for services provided in relation to
serving of food or beverages subject to condition that there is no AC facility
in any part of such canteen or mess at any time during the year.
Auxiliary
Education Services
An educational institution may
provide a number of services to its students, staff or other persons such as
transportation services to student of staff, hostel facility, books and
uniforms, placement services, library services, games and sports participation,
renting of quarters to staff, renting of auditorium or halls to other, mess or canteen
facility, etc. for which it may charge separately or otherwise. Entry No. 9 of
Mega Exemption Notification grants exemption in this respect to some of such
auxiliary education services.
With effect from 1st
April 2013, Auxiliary education services and renting services provided to
an educational institution (which provides exempted education services) is
exempted from service tax. And auxiliary education services and renting
services provided by all educational institutions are taxable
irrespective of exemption of their basic education.
Following activities are auxiliary
educational services:
Ø Any services relating to imparting any skill,
knowledge or education,
Ø Development of course content,
Ø Enhancement activity
Ø Following outsourced services –
·
Admission to such
institution
·
Conduct of
examination
·
Catering for the
students under any mid-day meals
·
Transportation of
students, faculty or staff of such institution.
The
Transportation facility can be tabulated:
|
Nature of Service
|
Taxability
|
|
1.
Transportation services provided by
an educational institution whose basic education is exempted (through own
buses and Vans).
2.
Transportation services provided by
and educational institution whose basic education is not exempted (through
own buses and Vans).
3.
Transportation services provided by
a Contractor to an educational institution whose basic education is
exempted and where contractor is receiving charges from institute and
institute is recovering such charges from students.
4.
Transportation services provided by
a Contractor to an educational institution whose basic education is not
exempted and where contractor is receiving charges from institute and
institute is recovering such charges from students
5.
Transportation Services provided by
a Contractor to any educational institution where contractor is recovering
charges directly from students, staff or faculty.
|
Transportation services are taxable
Transportation services are taxable
Transportation services are exempted
Transportation services are taxable
Taxable as such services do not amount to provided to
educational institution.
|
Admission fee,
Examination Fee or Development Fee charged from students
Where the work of conduct of
examination or admission process is given on contract by such educational
institute then contract fees charged by such contractors are exempt for service
tax, if such services are provided to an exempt educational institute.
Renting of
Immovable Property by or to Educational Institution
Entry No.
9 of Mega Exemption Notification provides, the services of renting of immovable
property provided to educational institutions are exempt only
when the basic educational services provided by such institution are also
exempt from service tax.
Service of renting of immovable
property provided by an educational institute is liable for
service tax unless such renting is made exempted elsewhere.
Placement
Services to or by Educational Institutions
Placement services provided to or by
educational institutions are not covered in any entry of negative list or Mega
Exemption Notification.
Educational
Services by Charitable Trusts
Generally,
educational institutions, schools, colleges and universities are registered
under the provisions of Section 12AA of Income-tax Act, 1961 and claim
exemption from income tax under section 11 and 12 of the Act.
Entry No. 4 of Mega Exemption
Notification exempts services provided by an entity registered under the
section 12AA by way of charitable activities.
Notification No. 25/2012 dated
20.06.2012 provides that if an educational institution providing charitable
activities and registered under the Section 12AA of Income-tax Act receives any
service from a provider of service, located in non-taxable territory then such
services are not liable for service tax.
Construction of
Government Schools, Colleges, Universities or Other Educational Institute
Entry No.
12 of Mega Exemption Notification exempts the services provided to the
Government, a local authority or a government authority by way of construction,
erection, commissioning, installation, completion, fitting out, repair,
maintenance, renovation or alteration of a structure for use as an educational
establishment.
However, i the above services are
provided to private educational establishments the such services are liable for
service tax even their basic education is covered under negative list.
Library Fees
The fees
charged by an educational institute for lending books, publications, etc. are
exempt from service tax.
Training or
Coaching relating to Arts, Culture or Sports
The fees charged
by an educational institute in respect of training or coaching relating to
arts, culture or sports are exempt from the service tax whether or not their
basic education service are exempt from service tax.
Receipts from
Sale of Books, Uniforms and other Materials
Negative
list covers trading of goods, therefore, the amount charged by educational
institutions towards, books, uniforms and other material which are covered in
the definition of Goods. Such amounts are not subject to charge of service tax.
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