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Service Tax exemption to Transportation, Catering, Security etc services provided to Educational Institutions

CBEC has issued Notification no. 10/2017 – ST dated 8th March, 2017 amending entry no. 9 (b) of Mega Exemption Notification i.e. 25/2012-ST dated 20.06.2012 by inserting the following proviso:

“Provided that nothing contained in clause (b) of this entry shall apply to an educational institution other than an institution providing services by way of pre-school education and education up to higher secondary school or equivalent;”.

Prior to this amendment, as per Entry no 9 (b) of Notification no 25/2012-ST, following services received by educational institutions like Pre-school, Schools, Recognized Degree imparting Institutions or Recognized Vocational Training Institute was exempted from service tax

  1. transportation of students, faculty and staff;
  2. catering, including any mid-day meals scheme sponsored by the Government;
  3. security or cleaning or house-keeping services performed in such educational institution;
  4. services relating to admission to, or conduct of examination by, such institution;

However, after the insertion of above proviso vide notification no 10/2017-ST, w.e.f. 01-04-2017, the exemption will be available to above services provided to Pre-School and Schools only, comparable situation are as as under:

Situation before amendment Situation after amendment
Before such amendment, above listed services were exempted when provided to the following  institutions;
“educational institution” means an institution providing 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 recognised by any law for the time being in force;
III. education as a part of an approved vocational education course
However, after the amendment the scope of the exemption is reduced and hence now the exemption will be available only to:
(i) the educational institution which provides services by way of pre-school education and education up to higher secondary school or equivalent.

Click here for notification no 10/2017-ST  st10-2017