Budget 2019: IIMs to get refund on service taxes paid between 2003 and 2016

NEW DELHI: The Indian Institutes of Management (IIMs) may benefit from the budget 2019 announced today. In a retrospective amendment, these premium business schools may get a refund of the service taxes paid during the period July 1, 2003 till March 31, 2016 for courses other than executive development programme.
“IIMs were slapped with notices for the intervening period and some had paid service tax in response to notices. They had approached HRD ministry for a resolution. A retrospective amendment has been made in the service tax law now to provide for exemption from July 2003,” said Waman Parkhi, partner, In-direct taxes, KPMG India.

“As a result where notices have been issued to IIMs they will not have to pay service tax. Where they have already paid service tax, they can claim refund if they apply within 6 months of passing of the budget in the Parliament,” he said.

Services provided by the IIMs that would get the retrospective exemption include Post Graduate Programmes in management, fellow programme in Management, five-year integrated programme in Management for the above period.


"As most IIM courses were educational courses per se, possible disqualification from an exemption on account of a technical reading had entailed a service tax levy on these institutes. This retrospective amendment provides appropriate relief to these Institutions,” Abhishek Jain, Tax Partner, EY said.

These institutes should be mindful of the timeline of six months prescribed for claiming refund of the service tax paid, both analysts said.

Service tax on commercial training and coaching was introduced in 2003 but pre-school and higher secondary school courses were not liable to tax. Similarly fee for any degree recognized by any law also was not liable services tax. During this time, the IIMs were giving out diplomas and not degrees as they were not autonomous institutes.