Directorate General of GST Intelligence (DGGI) has sent show-cause notices to a total of seven educational institutions in India including IIT Delhi – demanding unpaid taxes amounting to ₹220 crore total.
Besides IIT Delhi, the list includes Punjab University; Sree Chitra Tirunal Institute for Medical Sciences and Technology; the Centre for Sponsored Research and Consultancy (Anna University); Shanmugha Arts, Science, Technology & Research Academy; Amrita Vishwa Vidyapeetham; and Kalasalingam Academy of Research and Education.
All seven institutions were issued show-cause notices in early August for non-payment of GST on grants received by them from government and non-government bodies for conducting research, as per the sources
DGGI notice to Punjab University is for ₹4 crore, IIT Delhi for ₹120.3 crore, Sree Chitra Tirunal Institute for Medical Sciences and Technology for ₹7.3 crore, Centre for Sponsored Research and Consultancy (Anna University) for ₹5.4 crore, Shanmugha Arts, Science, Technology & Research Academy for ₹10 crore, Amrita Vishwa Vidyapeetham for ₹63 crore and Kalasalingam Academy of Research and Education for ₹10 crore, approximately.
IIT-Delhi has 30 days to respond to the GST notice, justifying why the claimed amount of ₹120 crore and additional penalties should not be imposed.
Speaking of the situation for educational institutions, T.V. Mohandas Pai, Chairman of Manipal Global Education Services (MaGE), and former CFO of Infosys, has regarded DGGI’s action as ‘tax terrorism’.
Pai took on to X and directly addressed Prime Minister Narendra Modi, trying to draw attention to the matter.
“GST demand on IIT-Delhi’s research grants sparks controversy over taxing education PM @narendramodi Sir Again tax terrorism at its worst? What is happening with @gstindia @cbic_india? Is there no limit to tax terrorism? Sad”
GST demand on IIT-Delhi's research grants sparks controversy over taxing education PM @narendramodi Sir Again tax terrorism at its worst? What is happening with @gstindia @cbic_india ? Is there no limit to tax terrorism? Sad https://t.co/30v39NhDo4
— Mohandas Pai (@TVMohandasPai) August 15, 2024
According to the reports, The Ministry of Education is working on a response to a recent notification. This suggests that there may be a misunderstanding about whether government-funded research projects should be taxed with GST. According to the Ministry, these research projects should be exempt from GST. They are preparing a formal reply to clarify this.
“We believe this is a misinterpretation. In our view, GST should not be imposed on government-funded research. Regrettably, such notices are issued. We ought to encourage and support research rather than seeing it as a taxable entity.” said a top Ministry of Education official in a statement to Times of India
“Implementing GST on research funds to universities is a ‘major setback’ for the growth of Indian higher education institutions. The finance ministry has failed to notice that a significant amount of the money is being utilised to buy consumables and assets that are already covered by GST.” the head of a private deemed university keeping anonymity
Pai also showed his concern with regard to a new regulation that reportedly prevents local family offices from setting up investment funds in Gujarat’s GIFT City. It is believed that this move comes on the back of fears associated with bypassing taxes and capital controls.
GIFT City, also called Tec-City is a central business district under construction in the Gandhinagar district in Gujarat, India. By establishing offices in the GIFT City, companies benefit from a 10-year income tax exemption, lower minimum alternate tax (MAT), and exemption from capital gains tax on the sale of units.
Pai again took on to X on Wednesday to directly address the prime minister for the second time -alongside sharing a post of the notable early-stage technology investor Rajeev Mantri on the same matter.
“pm @narendramodi Sir this goes against everything you are asking Indians to do to globalise, compete globally and build a developed India! That needs global investments, understanding of trends, creation of networks. Pl intervene @PMOIndia”
pm @narendramodi Sir this goes against everything you are asking Indians to do to globalise, compete globally and build a developed India! That needs global investments, understanding of trends, creation of networks. Pl intervene @PMOIndia https://t.co/qhk3AErvfr
— Mohandas Pai (@TVMohandasPai) August 21, 2024
In his third address to the prime minister, Pai on Thursday said,
“PM @narendramodi Sir,some regulators think that all Indian citizens are tax evaders and need to be punished.look at what they are doing. You have said you respect tax payers,is this the way to respect honest tax payers?harass them,deny them? Pl intervene @RMantri @nsitharaman”
PM @narendramodi Sir,some regulators think that all Indian citizens are tax evaders and need to be punished.look at what they are doing. You have said you respect tax payers,is this the way to respect honest tax payers?harass them,deny them? Pl intervene @RMantri @nsitharaman https://t.co/GzBMBUvO55
— Mohandas Pai (@TVMohandasPai) August 22, 2024
Besides educational institutions, a number of private-sector companies have also received GST notices. Notably, Mahindra Holidays & Resorts India has received a demand notice of around ₹16.77 crore, including a penalty, from tax authorities. The company is now taking necessary legal actions to address this issue and seek relief from the appropriate authority.
Infosys has received a massive GST notice of ₹32,403 crore for services availed from its international branches between 2017 and 2022. The company has termed this as a ‘pre-show cause’ notice and stated that it believes GST is not applicable to these expenses. This move has sparked a debate on social media platform X, with experts and users sharing their opinions on GST regulations and calling for reforms.
