Service Tax on educational services

By | May 23, 2016
(Last Updated On: May 23, 2016)

Service Tax on educational services

(After Finance Act 2016)

Service Tax on educational services

 Service tax is Payable on Educational Services except when they are specifically covered in the Mega Exemption list vide NOTIFICATION NO.25/2012-ST as amended from time to time or covered in the negative list of services

Mega Exemption from Service Tax on educational services or when services are relating to education are covered as follow :-

  • As per Notification No. 25/2012-Service Tax Dated  20.06.2012 w.e.f 01.07.2012 Entry No 4,   Services by an entity registered under section 12AA of the Income tax Act, 1961 (43 of 1961) by way of charitable activities (Please Read Definition below of  charitable activities which define advancement of educational programmes or skill development  relating to specified persons )
  • Notification No. 6/2014-ST, dated 11-7-2014, w.e.f 11-7-2014 Entry No 9. 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;

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

  • As per Notification No. 13/2013-ST, dated 10-9-2013. Entry No 9A , Any services provided by,

i) the National Skill Development Corporation set up by the Government of India;

ii) A Sector Skill Council approved by the National Skill Development Corporation

iii) an assessment agency approved by the Sector Skill Council or the National Skill Development Corporation;

iv) a training partner approved by the National Skill Development Corporation or the Sector Skill Council,

in relation to

(a) the National Skill Development Programme implemented by the National Skill Development Corporation; or

(b) a vocational skill development course under the National Skill Certification and Monetary Reward Scheme; or

(c) any other Scheme implemented by the National Skill Development Corporation.

  • As per NOTIFICATION NO.9/2016-ST, DATED 1-3-2016 Entry No 9B. (Inserted with effect from 1st March, 2016 ) Services provided by the Indian Institutes of Management, as per the guidelines of the Central Government, to their students, by way of the following educational programmes, except Executive Development Programme,

a) two year full time residential Post Graduate Programmes in Management for the Post Graduate Diploma in Management, to which admissions are made on the basis of Common Admission Test (CAT), conducted by Indian Institute of Management

b) fellow programme in Management;

c) five year integrated programme in Management.

  • As per Notification No. 9/2016-ST, dated 1-3-2016, w.e.f. 1-4-2016 Entry No 9C , services of assessing bodies empanelled centrally by Directorate General of Training, Ministry of Skill Development and Entrepreneurship by way of assessments under Skill Development Initiative (SDI) Scheme;
  • As per Notification No. 9/2016-ST, dated 1-3-2016, w.e.f. 1-4-2016 Entry No 9D,  services provided by training providers (Project implementation agencies) under Deen Dayal Upadhyaya Grameen Kaushalya Yojana under the Ministry of Rural Development by way of offering skill or vocational training courses certified by National Council For Vocational Training
  • As per NOTIFICATION NO.9/2016-ST, DATED 1-3-2016 Entry No 12A ( inserted with effect from the 1st March, 2016)  Services provided to the Government, a local authority or a governmental authority by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of—

a) a civil structure or any other original works meant predominantly for use other than for commerce, industry, or any other business or profession;

b) a structure meant predominantly for use as (i) an educational, (ii) a clinical, or(iii) an art or cultural establishment; or

c) a residential complex predominantly meant for self-use or the use of their employees or other persons specified in the Explanation 1 to clause (44) of section 65 B of the said Act;

under a contract which had been entered into prior to the 1st March, 2015 and on which appropriate stamp duty, where applicable, had been paid prior to such date

provided that nothing contained in this entry shall apply on or after the 1st April, 2020;”

  • As per Notification No. 25/2012-Service Tax Dated  20.06.2012 w.e.f 01.07.2012 Entry No 34 Services received from a provider of service located in a non- taxable territory by –

    (a)  Government, a local authority, a governmental authority or an individual in relation to any purpose other than commerce, industry or any other business or profession;

    (b)  an entity registered under section 12AA of the Income tax Act, 1961 (43 of 1961) for the purposes of providing charitable activities; or

    (c)   a person located in a non-taxable territory;

Negative List covering Educational Services Omitted by Finance Act 2016

LETTER D.O.F. NO. 334/8/2016-TRU, DATED 29-2-2016

Presently, clause (l) of section 66D of the Act [Negative List] covers specified educational services. These services are proposed to be omitted from the Negative List but the service tax exemption on them is being continued by incorporating them in the general exemption notification (Notification No. 25/2012-ST as amended by notification No. 09/2016-ST, dated 1st March, 2016 refers). This amendment in the notification shall come into effect from the date of enactment of Finance Bill, 2016.(Also Read Finance Bill 2016 assented to by President on 14.05.2016 )

Thus following services covered in the Section 66D Clause I (Negative list)  has been omitted w.e.f 14.05.2016

(l) services by way of—

(i) pre-school education and education up to higher secondary school or equivalent;

(ii) education as a part of a curriculum for obtaining a qualification recognised by any law for the time being in force;

(iii) education as a part of an approved vocational education course

Approved vocational education course : Definition

 As per NOTIFICATION NO.9/2016-ST, DATED 1-3-2016

After clause (b), The following clause shall be inserted with effect from such date on which the Finance Bill, 2016 receives assent of the President of India, namely:

‘(ba) “approved vocational education course” means,—

i) a course run by an industrial training institute or an industrial training centre affiliated to the National Council for Vocational Training or State Council for Vocational Training offering courses in designated trades notified under the Apprentices Act, 1961 (52 of 1961) or

ii) a Modular Employable Skill Course, approved by the National Council of Vocational Training, run by a person registered with the Directorate General of Training, Ministry of Skill Development and Entrepreneurship

Educational institution : Definition

 As per NOTIFICATION NO.9/2016-ST, DATED 1-3-2016

for clause (oa), the following shall be substituted with effect from such date on which the Finance Bill, 2016, receives assent of the President of India, namely

(oa) “educational 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 a curriculum for obtaining a qualification recognised by any law for the time being in force

iii) education as a part of an approved vocational education course

Charitable activities : Definition

As per Notification No. 25/2012-Service Tax Dated  20.06.2012 w.e.f 01.07.2012

(k) “charitable activities” means activities relating to –

(i) public health by way of –

    (a)  care or counseling of (i) terminally ill persons or persons with severe physical or mental disability, (ii) persons afflicted with HIV or AIDS, or (iii) persons addicted to a dependence-forming substance such as narcotics drugs or alcohol; or

    (b)  public awareness of preventive health, family planning or prevention of HIV infection;

(ii) advancement of religion or spirituality or yoga (by Notification No. 20/2015-ST, dated 21-10-2015, w.e.f. 21-10-2015.)

(iii) advancement of educational programmes or skill development relating to,-

    (a)     abandoned, orphaned or homeless children;

    (b)     physically or mentally abused and traumatized persons;

    (c)      prisoners; or

    (d)     persons over the age of 65 years residing in a rural area;

(iv) preservation of environment including watershed, forests and wildlife;

Finance Act 2016 Amendment relating to Service Tax on educational services clarified :-

LETTER D.O.F. NO. 334/8/2016-TRU, DATED 29-2-2016

Presently, clause (l) of section 66D of the Act [Negative List] covers specified educational services. These services are proposed to be omitted from the Negative List but the service tax exemption on them is being continued by incorporating them in the general exemption notification (Notification No. 25/2012-ST as amended by notification No. 09/2016-ST, dated 1st March, 2016 refers). Consequently, the definition of „approved vocational education course‟ [clause (11) of section 65B] is also proposed to be omitted from the Finance Act and is being incorporated in the general exemption notification (Notification No. 25/2012-ST as amended by notification No 09/2016-ST, dated 1st March, 2016 refers). This amendment in the notification shall come into effect from the date of enactment of Finance Bill, 2016.(Also Read Finance Bill 2016 assented to by President on 14.05.2016 )

Related post

  1. SERVICES EXEMPT UNDER MEGA EXEMPTION NOTIFICATION
  2. Service tax not collected , tax liability by cum tax consideration
  3. How to take Service Tax Registration Online
  4. Amendment in Service Tax by Budget 2016
  5. Govt declare education and real estate as public utility services
  6. Construction for an educational institutions and service tax Exemption
Direct Taxes Ready ReckonerService Tax Ready ReckonerCompany Law Ready Reckonertax deduction at source
New Books Released on Tax , GST and law

Leave a Reply

Your email address will not be published. Required fields are marked *