Exemption to Services by Indian Institutes of Management

Indian Institute of Management is known as the top ranking establishment known for its management education and research in India. They primarily offer postgraduate, doctoral and executive education programs. This is one of the recognized business school, providing best quality of education services of the country in the area of management. 

Notification No. 25/2012-ST dated. 20.06.2012 exempted services provided to or by an educational institution with intent to remove the burden of Service Tax from education sector. In order to expand immunity provided to educational services from Service Tax levy an addition has been done vide Notification No. 9/2016-ST dated 01.03.2016 to the former Notification, covering services provided by the IIM’s to the list of exempted services. Services provided by the Indian Institutes of Management (IIM) by way of 2 year full time Post Graduate Program in Management (PGPM) (other than executive development Program), admissions to which are made through Common Admission Test conducted by IIMs, 5 year Integrated Program in Management and Fellowship Program in Management are exempted from service tax.

The executive development Program will continue to be taxable.

It has been informed by Secretary, Ministry of Human Resource Development (MHRD) vide letter D. O. No.2-14/2009-TS.V dated 8th July, 2014 and 5th February, 2014 that MHRD is vested with the power to recognise educational courses for the purpose of recruitment to posts under Government of India. It has been further stated by MHRD in their above mentioned letters that IIMs have been conducting Post Graduate Programs in Management and Fellowship Programs which are equivalent to MBA and Ph.D degrees. It has been again reiterated by Secretary, MHRD vide letter D.O. 3/5/2013-TS.V dated 15.1.2016 that the IIMs have been conducting Post Graduate Programs in Management and Fellowship Programs which are equivalent to MBA and Ph.D degrees, respectively, (as also clarified by associations like Association of Indian Universities, Inter -University Board of India etc.). Thereby services from IIM qualify to fall in the category of educational services eligible to be considered for the exemption from 01.03.2016.

In view of this, the exemption being given to the above Programs of IIMs is clarificatory in nature and in view of the same, liability to pay service tax in respect of the said Programs for the past period will also become infructuous. Therefore the Government has taken a firm positive step to remove the burden of Service Tax from the education services provided by the IIM’s with effect from 01.03.2016

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