The Delhi Government has notified a clarification on the Goods and Services Tax (GST) Exemption available to educational institutions that the same shall extend to State and Central Testing Agencies for the limited purpose of conduct of entrance examinations.
As per the notification, Any authority, board or body set up by the Central Government or State Government including National Testing Agency for conduct of entrance examination for admission to educational institutions shall be treated as educational institution for the limited purpose of providing services by way of conduct of entrance examination for admission to educational institutions and can avail the Goods and Services Tax (GST) exemption.
It was also stated that the notification shall come into force with effect from the 01st March, 2023.
It is important to know that the exemption, as per the Principal Notification published in the Gazette of Delhi, Extraordinary, vide notification No. 12/2017 -State Tax (Rate), is applicable to only the intra-State supply of services.
Notably, all services provided by the Government or a local authority are not exempt from tax. As for instance, services, namely, (i) services by the Department of Posts by way of speed post, express parcel post, life insurance, and agency services provided to a person other than Government; (ii) services in relation to an aircraft or a vessel, inside or outside the precincts of an airport or a port; (iii) transport of goods or passengers; or (iv) any service, other than services
covered under (i) to (iii) above, provided to business entities are not exempt and that these services are liable to tax.
That said, most of the services provided by the Central Government, State Government, Union Territory or local authority are exempt from tax. These include services provided by government or a local authority or governmental authority by way of any activity in relation to any function entrusted to a municipality under Article 243W of the Constitution and services by a governmental authority by way of any activity in relation to any function entrusted to a Panchayat under article 243G of the Constitution.
The Government or a local authority or a governmental authority is liable to pay tax on supply of services other than the services notified as exempt or notified as neither a supply of goods nor a supply of services under clause (b) of sub-section (2) of section 7 of the WBGST Act, 2017. In respect of services other than – (i) renting of immovable property; (ii) services by the Department of Posts by way of speed post, express parcel post, life insurance, and agency services provided to a person other than Government; and (iii) services in relation to an aircraft or a vessel, inside or outside the precincts of an airport or a port, the service recipients are required to pay the tax under reverse charge mechanism.
However, the recent notification by the Government of NCT of Delhi brings much required clarity with respect to the tax ability of services provided by central and state testing agencies.
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