Central Board of Indirect Taxes & Custom (CBIC) has said that examination fee collected by Central or States Board or even National Board of Examination (NBE) will not attract Goods & Services Tax (GST). It has also said mid-day meals sponsored by corporate will not attract GST.

These are part of the seven circulars issued by CBIC to implement recommendations made by GST Council in its meeting in May.

Central and State Board and NBE provide services such as entrance examinations (on charging a fee) for admission to educational institution, input services for conducting such entrance examinations for students, and accreditation of educational institutions or professionals so as to authorise them to provide their respective services.

According to a CBIC circular, since GST is exempt on services provided by Central or State Boards or even NBE by way of conduct of examination for the students, including conduct of entrance examination for admission to educational institution, therefore, GST shall not apply to any fee or any amount charged by such Boards for conduct of such examinations, including entrance examinations. Same is applicable on input services relating to exams, it said.

“The clarification clearly brings out the intent of the government to keep any services pertaining to conduct of examination outside the taxability of GST,” Aditya Singhania, Partner with Singhania’s GST Consultancy said.

Mid-day meals

Another issue marred by AARs’ ruling was applicability of GST on the issues as to whether serving of food in schools under Mid-Day Meals Scheme would be exempt if such supplies are funded by government grants and/or corporate donations. Now, based on recommendation by the Council, CBIC said it is exempted irrespective of its funding from government grants or corporate donations. As educational institutions include anganwadis, hence serving of food to anganwadis shall also be covered by said exemption, whether sponsored by government or through donation from corporates.

Abhishek Jain, Tax Partner with EY feels that this clarification will have a wide ambit, covering mid-day meals provided in schools, including pre-schools and anganwadis, irrespective of the funding of such meals by corporate or government will be much appreciated by the stakeholders. “This clarification will help reduce the cost on account of GST, for the educational institutions involved in providing such meals thereby saving on the corpus of such institutes,” he said.

Circular for road sector

One circular has clarified about applicability of GST on the activity of construction of road where considerations are received in deferred payment (annuity). Jain said it has always been a grey area to determine what annuity payments pertain to construction and what pertain to grant of access to the road and accordingly he calls for more clarification. Singhania says the said circular clarifies for future but would lead developers to discharge GST even for the past periods along-with interest. Further, businesses have to ascertain and take decisions regarding the input tax credit that has been reversed treating it as an exempt supply. “Comparatively, taxpayers who have taken an Advance Ruling and which is in their favor may not end up paying interest and seems to be more on the safer side,” he said.

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