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Private varsities alleged for tax evasion

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The Central Revenue Department which has launched the probe with support from UGC estimates tax evasion of several crores from these varsities

New Delhi: Against the backdrop of diminishing revenue reserves, the central Revenue Department launched a probe against the private varsities that have long been alleged of evading tax and flouting UGC norms by setting up off-shore campuses, off-campus centres and study centres.

As per clause 3.3 of the UGC regulation, any private university established under a State Act should operate ordinarily within the boundary of the State concerned.

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In extraordinary conditions, the universities, which have been in place for at least five years, may obtain permission from UGC to operate off-campus centres, off-shore campuses and study centres. In such a case, the university also needs to get approval from the State Government where the centre is proposed to be opened.

The incidence of tax arises from Section 66D (l) of the Finance Act, 1994, under which, services by way of ‘education as a part of a curriculum for obtaining a qualification recognised by law for the time being in force’ are excluded from the applicability of service tax. But, off-campus study centres, not affiliated to the UGC, attract service tax of 12.36 per cent on their total income.

If service tax is imposed on these private varsities as an outcome of the investigation, the brunt of bearing the service tax implication would come upon the students. The students would have to end up paying a lot more in addition to their existing fees.

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