The GST Council, led by Finance Minister Nirmala Sitharaman, has announced a key decision to exempt research funding for higher educational institutions and research centres from GST. This exemption covers both private and public funding sources and applies to institutions established under central or state laws, as well as those with income tax exemptions.
This decision comes in response to concerns raised by Prime Minister Narendra Modi following the issuance of GST notices to research institutions such as IIT-Delhi and Anna University. The move is aimed at promoting research and development (R&D) in India by relieving research institutions from the burden of GST, enabling them to focus on innovative projects and patent development.
Nirmala Sitharaman emphasised that the tax notices were the result of an interpretative issue by tax authorities rather than an instance of “tax terrorism.” She reiterated that research funding, which often leads to patents, innovations, and advancements in fields like climate-resistant agriculture, should not be subjected to GST.
Revenue Secretary Sanjay Malhotra confirmed that the tax claims would be regularised, providing relief to institutions that had received GST notices. This decision is expected to encourage higher educational institutions and research centres to continue their R&D efforts without the concern of additional taxation.
In addition to the exemption for research funding, the GST Council also clarified that foreign airlines will be exempt from GST on the import of services from related entities outside India, where no consideration is involved.
Also Read: National University of Dubai Launched with Dh4.5 Billion Investment
This decision aligns with the government’s ongoing commitment to fostering R&D and innovation through initiatives like the National Research Foundation and increased funding for research projects in the Union Budget. The exemption is expected to strengthen India’s position in global research and development efforts, supporting higher education and innovation at the national level.
This move is a significant step in boosting India’s R&D ecosystem, furthering the government’s vision of making India a global leader in research, innovation, and technology development.
