Education management solution

[Anupam Tiwari]

Now a days various educational institutions/schools enter into agreement with IT service providers for development of educational portal for providing information about day to day activities like attendance, report cards, cultural meet, about holidays  to students/parents/staff. The information is also provided through SMSs. Whether the service is taxable. If yes, category under which it falls prior to 01.07.2012 

[YAGAY andSUN]

Dear Anupam,

Auxiliary Educational Services are exempted from service tax.  This has been clarified by the CBEC in their Circular.

Ministry of Finance (Central Board of Excise & Customs) had recently clarified on exemption provided to auxiliary services provided to education institutes vide Circular No. 172/7/2013-ST dated 19 September, 2013, as a response to various representations from educational sectors across the country. The Circular states in its operative clarification as under –

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. There are many services provided to an educational institution. These have been described as “auxiliary educational services” and they have been defined in the exemption notification. Such services provided to an educational institution are exempt from service tax. For example, if a school hires a bus from a transport operator in order to ferry students to and from school, the transport services provided by the transport operator to the school 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, canteen, etc."

Owing to prevailing confusions amongst tax payers and rumors, Ministry of Finance has issued a clarification wherein taxability of various services provided to educational institutes has been clarified. There are many services provided to an educational institution. These are described as auxiliary education services and they have been defined in the exemption itself. Such services provided to an educational institution are exempt from Service Tax. For example, if a school or a college hires a bus from a transport operator in order to ferry students to and from school or college, the transport services provided by the transport operator to the school are exempt by virtue of the specific notification. Similarly, services in relation to hostels, house–keeping, security services, canteen etc shall be exempt from levy of Service Tax.

However, this exemption has a catch. These exemptions are available only for educational institutes and not for commercial coaching institutes. Thus, any coaching or training or tuition aiding the education would not be able to enjoy this exemption, as the exemption is only for education or services in relation to education. Further, services provided to such educational institutes or bodies alone are exempt.

Regards,

Team YAGAY & SUN

(Indirect Taxation)

[Anupam Tiwari]

Dear Sir,

It is O.K for the period from 01.07.2012. But what about the period prior to 01.07.2012 i.e. before negative list of services. Was'nt it classifaible under 'information technology software service'

AI Summary

IT Services for Educational Portals Exempt from Service Tax per Ministry of Finance Circular Since July 2012 An individual inquired about the taxability of IT services provided to educational institutions for developing educational portals. A respondent clarified that auxiliary educational services, including those related to education, are exempt from service tax as per a Ministry of Finance circular. This exemption applies to services like transport, hostels, and housekeeping, but not to commercial coaching institutes. The exemption is valid from July 1, 2012, following the introduction of the negative list. The inquirer further questioned the classification of such services before this date, suggesting they might have fallen under 'information technology software service.'