IIMs' executive post-graduate programmes to face GST

NEW DELHI: Executive post-graduate programmes offered by the Indian Institutes of Management (IIMs) will face the goods and services tax, according to the Authority for Advance Rulings.

The Madhya Pradesh Authority for Advance Rulings said the one year programme is taxable even though the Indian Institutes of Management Act, 2017, provides tax exemptions for courses offered by the IIMs. It said executive programmes are not specifically exempted from tax.

The ruling came in response to an application filed by IIM Indore, which sought to know if this programme would be taxable. The MP AAR held that the Executive Post-Graduate Programme in management is taxable under GST. Under GST, services provided by an educational institution are exempt from tax. Under the GST law, educational institutions include those providing training to obtain a qualification recognised by law.


IIM Indore had contended that with the enactment of the IIM Act, degrees and diplomas granted by IIMs are recognised by law and hence should be exempted from tax. The AAR, however, observed that the services provided by the IIMs are specified by way of a separate entry in the exemption notification. While the two-year full time MBA courses, five-year integrated programme and fellow programme in management are exempt from tax, courses such as executive development programmes are not exempted.

Accordingly, it held that the benefit of general exemption available to educational institutions could not be claimed by IIM. “This ruling reinforces the view that only specified courses offered by IIMs are exempt from tax – the rest are taxable,” said Pratik Jain, national indirect tax leader at PwC.

Jain said while the definition of educational institution may be wide enough to cover such courses offered by the IIMs, the ruling underlines the principle that a specific entry shall prevail over a general entry. “It would be interesting to see if IIMs go for further appeal against this ruling,” he said.

The AAR is a quasi-judicial body that allows assesses to get guidance on their potential tax liabilities relating to any transaction beforehand. Although its rulings are case-specific, they have a persuasive impact on tax assessment in other similar cases.