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SERVICE TAX EXEMPTION ON EDUCATIONAL SERVICES (PART – I) |
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SERVICE TAX EXEMPTION ON EDUCATIONAL SERVICES (PART – I) |
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Understanding the Concept of Education and Coaching All education is not exempted and all coachings are not taxed. However, one needs to understand the difference between the two terms - education and coaching. According to Aiyar’s Advanced Law Lexicon, education means the bringing up, the process of developing and training the powers and capabilities of human beings. It is an act of providing with knowledge. Coaching or training is a very narrow activity imparting skill in a particular discipline but education is a broader term which is a process of development of personality of body, mind and intellect. The scope of education is broad but training or coaching is in a particular field. In Institute of Chartered Financial Analysts of India Versus CC & CE, Hyderabad-II [2008 (10) TMI 59 - CESTAT, BANGALORE] case , tribunal observed that coaching normally refers to a special teaching or a personalized teaching in certain subjects. Training is generally used to refer to practical instruction or learning process. Education is the process of overall development of a person. It included moral, intellectual and physical development of a child or a person. It is not restricted to a particular subject and it covers various subjects and areas. Moreover, as distinguished from coaching, education is not meant for succeeding in an examination or test but for overall development of the student. Education is a term of wide import and encompasses within its ambit the specialized function of training and coaching but this does not make all the three terms synonymous in nature. It is also true that Governments need fund to run the welfare state and to meet certain socio-economic objectives which pave for economic growth. Taxes in various forms direct and indirect come to the rescue of Government. Education and coaching, being an important part of our service sector should, therefore also attract taxation. Taxability w.e.f. 01-07-2012 W.e.f. 01.07.2012, the concept of Service Tax has changed. What is taxed now is an activity which gets covered under the scope of 'service' as defined in section 65B(44) of the Finance Act, 1994 as amended. Charge of Service Tax on and after 1.07.2012 is defined under section 66B of the Finance Act, 1994. Section 66B states that Service Tax shall be charged at the rate of 12% on value of all taxable services i.e., other than those specified in the negative list or exempted services, which are provided or agreed to be provided in the taxable territory by one person to another and collected in such manner as may be prescribed. Section 66B specifies the charge of service tax which is essentially that service tax shall be levied on all services provided or agreed to be provided in a taxable territory, other than services specified in the negative list. Thus, as per charging section 66B, Service Tax shall be applicable on all services except negative list services or services which are specifically exempt from Service Tax. Exemptions to Services relating to Education Sector Only specified services provided by educational institutions are included in the negative list. Services provided to educational institutions are not covered under negative list. However, certain services provided to and by educational institutions are separately exempted vide Notification No. 25/2012-ST, dated 20-6-2012. (1) Exemption under Entry No. 9 of Notification No. 25/2012-ST dated 20.06.2012 (as amended) (i) During the period 1.7.2012 to 31.03.2013 : The following services provided to or by an educational institution in respect of education were exempted from service tax, by way of,- (a) Auxiliary educational services; or (b) Renting of immovable property ‘Auxiliary educational services’ were defined in the mega exemption notification dated 20.06.2012. In terms of the said definition, the following activities were covered under auxiliary educational services:
- admission to such institution - conduct of examination - catering for the students under any mid-day meals scheme sponsored by Government - transportation of students, faculty or staff of such institution. If any of the aforementioned auxiliary services do not pertain to education per se, it may not be termed as auxiliary education service. To have a nexus with education is a necessary pre-condition. It must relate to the specified activities viz,
During this period exemption was available for the services provided to or by educational institutions in respect of education which was itself exempted from service tax. Therefore, service tax was chargeable on such auxiliary educational services which were in respect of services education chargeable to Service Tax. 5(ii) During the period from 1.4.2013 to 10.07.2014
Exemption up to 31.03.2013 -
Exemption w.e.f. 01.04.2013 -
(To be continued…….)
By: Dr. Sanjiv Agarwal - January 29, 2015
Discussions to this article
Nice article for brain storming, thank you sir
Respected Sir, I Would like to request your good self that, Government has been announced G S T From 1st April,2016. Kindly clarify the GST Thanking you, K. Vasudeva Rao
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