All services relating to education are exempt from service tax
Directorate of Service Tax, by a circular (No.172/7/2013) clarified that all services relating to education are exempt from service tax. Such services include providing hostels, transportation, housekeeping, security services, canteen, etc to educational institutions. 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.
The said circular is issued in response to the applications seeking clarification regarding the levy of service tax relating to the education sector.
Negative list specified in section 66D (i) of the finance act specifies that
Services by way of –
(i) Pre-school education and education up to higher secondary school or equivalent.
(ii) Education as a part of a curriculum for obtaining a qualification recognized by any law for the time being in force.
(iii) Education as a part of an approved vocational education course.
Further, a notification (No.25/2012-ST) dated 20th June, 2012 specified that,
“Services provided to an educational institution in respect of education exempted from service tax, by way of,-
a) auxiliary educational services; or
b) renting of immovable property;”
By virtue of Negative list and Exemption notification, Service Tax Department clarified that all services relating to education are exempt from service tax
Association of Self financing Universities of Rajasthan, Unaided Schools’ Forum, Mumbai, are some of the parties sought clarification