IIMs to obtain retroactive relief of the service tax

NEW DELHI: a special provision for retroactive exemption from service tax in certain cases related to services provided by Indian Institutes of Management to students has been introduced in the to finance account. The retrospective exemption from the service tax has also been extended to the liquor license granted by the states.

Last year, IIM-Ahmedabad approached the human resources development ministry and at the same time moved a tax court against an income department order that demanded millions of rupees in service taxes for the courses taught by him, and treated the institute as a commercial training center.

To remove any doubts and avoid litigation, the to finance bill has introduced a retrospective amendment that clarifies that “ services provided by IIMs, as per the guidelines of the central government, to their students, by way of educational programmes, except executive development programme, are proposed to be exempted from service tax for the period commencing from July 2003 to March 2016”.

In March 2016, the to finance ministry had exempted fulltime management programmes of IIMs from service tax liability. The programmes exempted from tax include the two-year full-time post graduate programmes in management to which admissions are made on the basis of Common admission test (CAT), partner of program in management and the five years integrated Management program.

Similarly, the retrospective amendment also exempts any state service tax on the licensing of liquor. The state government will not collect or charge any service taxes by granting a liquor license, against consideration in the form of a license fee or application fee, for whatever name is called, he said.