Business schools may put burden of service tax on students

Mumbai:- Students of business management institutes may have to pay more with the excise department imposing a 12.5% service tax on the placement

fees of these institutes. While all placement agencies are entitled to pay these taxes, the government has recently made it mandatory for all business management institutes to do the same. Since these institutes have no other way of tackling the issue, their only option is to push it down on the students.

"Our institute is not aided by the government, so there is no way we can manage to pay these taxes on our own. We have no other option but to pass it on to the students now,'' said Dr Stephen D'Silva, Director of Jamnalal Bajaj Institute of Management Studies (JBIMS). The order was sent to most business schools way back in 2006. "Since 2008, they have been on our backs to pay up the money for the academic years 2006-2007 and onwards,'' added D'Silva.

Every student at JBIMS shells out Rs 15,000 as part of their placement fees in their total fees. "The service tax will be charged on this amount and the students will have to bear the burden,'' said D'Silva.

Most business and management schools in town are planning to take up the matter more seriously. "The business schools in Mumbai are not as expensive as those in other parts of the country. But the other expenses add up to a major cost. These taxes will just add up to the troubles of the students,'' said a director of another city business school.

"On one hand, they talk about putting an end to fee hike, and then they come up with such taxes. As of now, business schools have been targeted but soon, these taxes will be levied on all colleges with unaided courses offering placements,'' said Balakrishna Parab, faculty at JBIMS.

As of now, the institutes have sent a letter to the University of Mumbai which has handed over the case to lawyer Advait Sethna. "The case is still in its nascent stage but soon a case will be filed. This can be called a 'test case'. Prima facie, this is definitely arguable since because business schools don't fall under the service tax net,'' said Sethna.