The Finance Ministry today clarified that "auxiliary educational services" like hostels, canteen and school buses will not attract 12 per cent service tax.
"By virtue of the entry in the negative list and by virtue of the portion of the exemption notification, it will be clear that all services relating to education are exempt from service tax," the Central Board of Excise and Customs (CBEC) said.
The clarification was issued in response to queries raised by several educational institutions.
The CBEC further said there are many supplementary services or "auxiliary educational services" which have been defined in the exemption notification.
Such services, the CBEC said, provided to an educational institution are exempt from service tax.
Citing an example, transport services provided by a transport operator to a school to ferry students are exempt by virtue of the exemption notification.
In addition to the services mentioned in the definition of "auxiliary educational services", other examples would be hostels, housekeeping, security services and canteen, the CBEC added.
"Thus, the apprehensions conveyed in the representations submitted by certain educational institutions and organisations have no basis whatsoever. These institutions and organisations are requested not to give credence to rumours or mischievous suggestions," it added.
The Finance Ministry had received representations seeking clarifications regarding levy of service tax on certain services relating to the education sector.
