Student's corner

Should education institutions be exempt from service tax?

Dear Students,
 
LAST WEEK WE ASKED: Do you think education institutions should be kept out of the purview of service tax?

BEST RESPONSE

The educational loan given by banks is still not a preferred option for parents due to the high interest rates and repayment of the interest right from the commencement of the course. Students opting for educational loans also have to shell out higher due to service tax component. UG/PG course fees are also rising. On one hand, the government encourages people to take education through various schemes and on the other hand, makes people to pay service tax on education courses. The service tax is not small, its 12 per cent, which is very high for students opting for any course.

- Anand A Wadadekar, SAMVIT School of Infrastructure Business, Pune.

OTHER RESPONSES

Service taxes charged on educational institutes may be reduced to a certain extent. Concessions may be given to educational institutes. As a result of this, the fees charged by educational institutes will be less. More students would be able to afford to pay the college fees. More meritorious students may get opportunities to study.

- Rituparna Saha Ray, Fr. C. Rodrigues Institute of Management Studies.

Educational institute should be tax exempted since, the innovation and development takes place only by increasing the country’s literacy rate, which solely can be achieved by the establishing educational institutes. However the vocational courses are already tax exempted, the professional educational tax exemption encourages the people to establish new activities in education sector, which will ultimately lead the progress of country’s literacy growth rate.

- Srujan Kumar Bommena, National Institute of Construction Management and Research, Pune.

Although education has become a lucrative business, still, morally, education is a right of every citizen. On one hand, the government promotes 'Sarva Shikshan Abhiyaan', and on the other, collecting service tax would mean promoting education as a business. And what are we teaching our future generations: that education is a noble service or a profitable venture? We need to set our priorities right. Imposing service tax would mean indirectly burdening the citizens for what ought to be free, ideally. Already, government education institutions are lacking; by levying service tax, we'll gain money but lose our future.

- Dawood Ghasletwala, Institute of Management Technology, Ghaziabad.

Education institutions should not be kept out of service tax purview to education system.we all know that education may change the way of life a common person,so we should come under the mission to educate the society as possible we can do. But if we want to protect edu system to be a business should not tax free the edu system.

- Jagdish Dangi, UIT, RGPV.

Budget 2012-13 is a rather positive budget as enhanced allocations have been made to the higher education, school education has been exempted from service tax. This exclusion from service tax under negative list is however, not blanket exemption. There is every chance that the service tax laid on the auxiliary services linked to education, will be passed on to the students' fee which ultimately makes the education dearer than it is as of now. So, the government in case is reluctant to revert its decision, must do the needful by posing restrictions on hike in the fee with strict vigilance.

- YVS Karthik, National Institute of Pharmaceutical Education and Research ((NIPER), Mohali.

Keeping the education institutions out of the service tax purview will abridge the burden of heavy education expenditure on the parents who feel the pinch of the burden by paying heavy school and college fees for their children as the burden of the service tax is ultimately passed on to them by the institution.

- Jatin Kashyap, Post Graduate Government College, Chandigarh.

Education is the back bone of the knowledge economy which is the global image India has today. Laying taxes would only hamper the already costly setup of education in this country considering the average income of an Indian. The education sector is in a dire need of investment from grass root to the higher education level and should be kept out of the tax horizon.

- Swar Grover, GNDU, Amritsar.

Education sector is one of the areas whose output forms a major resource for the industry. In a way, educational institutes have a substantial role in the making of raw material for the industry. So, additional service tax on them would only hamper their efforts. Also, it would be vicious if the institutes pass on this extra burden to parents. It is time for the government to realize that by minimizing tax on educational bodies will indirectly benefit the job market. And thriving industrial sector will yield much better returns in comparison to the revenue earned by levying service tax.

- Shivam Chhabra, Integral University, Lucknow.

Today education is not a noble philanthropic industry but a full fledged money making sector. The government should levy nominal taxes which should be given back for the betterment of this sector.

- Anika Duggal, Jammu University.

The government looks upon schools and colleges as commercial entities, since the schools these days are inclined towards profit making. Hence the educational institutions are under the tax purview. But, the schools indirectly impose the tax burden on the parents. It would be wise if the government identifies the schools which are profit oriented, running in the name of charitable trustees and, impose service tax only on them rather than on the small and medium scaled private educational institutions.

- Mithun J B, Xavier Institute of Management and Entrepreneurship (XIME), Bangalore.

In the coeval world education sector has become a huge industry. Be it corporate houses, industrialists or big politicians, they invest heavily in the education sector. Going by the current trend education sector is a minting machine. As seen recently many incidence of huge donations etc. Thus, education institution should not be tax exempt.

- Nilaya Mitash Shanker, IIT Roorkee.

Educational Institutions should be kept out of the service tax purview. The catch in recent tax law is that the auxiliary services come under the service tax payables. If all the auxiliary services like hostel facilities, canteen facilities, text books, extracurricular activities etc come under the service tax umbrella, then the definition of education itself is compromised as the above facilities have essentially become part and parcel. Thus the stakeholders who are the parents and institutions are trapped in a catch-22 situation. To mask themselves from service tax, fees will be increased which will directly impact the wallets of parents.

- V. Sunil Babu, Xavier Institute of Management and Entrepreneurship, Bangalore.

There are certain services which an educational institution provides. Such services may attract service tax. However, in relation to services provided, there is utter confusion prevalent in schools which needs to be removed. For example, where a school charges separate tuition fee, library fee, exam fee, sports fee etc, it may not be liable to service tax as school education is in the negative list. In such a case, we cannot say that tuition fee is free from service tax but other fees shall be liable to service tax. In fact, all such fees are part of school education.

- Pratik Bairagi, Regional College of Management (Autonomous), Bhubaneswar.

Around 5% of India’s GDP is spent on education. The education system in our country has become a booming business. Many institutions in India are registered as charitable trusts to avoid tax. Here, making profits is the sole intention for these institutions.Hence the decision to impose a service tax of 12.36% on educational institutions is rational. However, the cost of education might go up by Rs.3000 for school students due to tax implementation. Therefore, the government should make it a point to see that the tax burden is not passed on to the parents in the form of fee increments.

- Navjeet Goraya, Xavier Institute of Management & Entrepreneurship (XIME), Bangalore.

 
Your responses should reach us at edu@business-standard.com by Monday evening every week. Please ensure that your responses do not exceed 100 words. Avoid attachments and email your full name, institute's name, batch and complete mailing address. The student who gives the 'Best Response' will be awarded Rs 500.

THIS WEEK'S QUESTION: Do you think IITs should do a rethink on the new IIT-JEE pattern and change it?