The government made it clear on Thursday that educational institutes, including the Indian Institutes of Management (IIMs) and Indian Institutes of Technology (IITs), would have to pay service tax for providing campus recruitment to their graduates.
“Educational institutes such as IITs and IIMs fall within the definition of “manpower recruitment or supply agency” and would have to pay service tax for providing campus recruitment,” a government circular said.
In the comprehensive circular, the government clarified on several other contentious issues related to service tax.
Services such as Mandaps, business chit funds, motor-vehicle service stations, trade fair organisers, sub-contractors of civil works and movers and packers, among others, would have to pay service taxes.
The review was undertaken following recommendations of the T.R Rustagi Committee report on several grey areas on levy of service tax. Service tax, which was introduced in 1994, is presently imposed on 100 categories covering a wide spectrum of services.
The government has also clarified that public broadcaster Prasar Bharati Corporation would have to pay service tax like any other broadcasting agency. Service tax would also be levied on the total value of any international air ticket, while the place of the ticket’s purchase is of no relevance.
Manpower recruitment agencies will also be liable to pay service tax as the agency agrees for the use of the services of an individual to another person for a fee.
Moneychangers, however, would remain outside the ambit of service tax as the government felt that buying or selling of foreign exchange without separately charging any amount as commission does not constitute a service.
Similarly, entry load and exit load charged by mutual funds and asset management companies cannot be treated as a service and therefore would remain outside the tax ambit.
Electronic depository services such as those provided by the Central depository services limited (CSDL) would, however, have to pay taxes as they charge a fee for providing electronic access to securities information.
Likewise, Angadias that undertake the delivery of documents, goods or articles received from a customer to another person for a price would also fall the category of a courier agency. The circular said halls and rooms let out by hotels and restaurants for a fee would fall under the category of Mandaps and would have to pay service taxes.
Authorised dealers of motor vehicles, even if they provide free servicing to their customers, would have to pay service tax, the government clarified.