The tax regime requires compulsory contribution to be made by the citizens to the Government in order to enable them carry out the developmental activities for the country. The recent introduction of the Goods and Services Tax (hereinafter referred to as “GST”) has subsumed the multiple taxes prevalent in the Indian system including Central Excise Duty, Service Tax, Entertainment Tax, Value Added Tax/Sales Tax, Octroi and Entry tax, etc. This single taxation, applicable only on value addition made at each stage with respect to the goods and services.
New subject covered under GST
The applicability of GST on educational services was not clear owing to the contrary notifications issued by the Government in this regard. As per the provisions of GST notification no.11/ 2017 the tax applicable on the education services is 18%. However, in respect of another GST notification no. 12/ 2017 the services provided by an educational institution to its students, faculty and staff.
IIM Executive Post Graduation Programme now taxable
The Indian Institute of Management-Indore (hereinafter referred to as “IIM”) had filed an application with the Madhya Pradesh Authority for Advance Ruling (hereinafter referred to as “AAR”) to seek clarity on the issue if the one-year Executive Post Graduate Programme in Management falls under the purview of GST, while the provisions of the Indian Institute of Management Act, 2017 exempted the same from the tax.
The AAR clarified that no ambiguity persisted regarding the applicability of GST on educational services. The Government does not intend to relieve all education programmes from the ambit of GST. The Executive Development Programme in Management offered by IIM is subject to the applicability of GST owing to the specific notification issued in this regard and the only specific courses provided by IIM are exempted from tax benefits which include 2-year full time Masters of Business Administration Course and the 5-year integrated programme in Management.