Coaching centres face DGGI probe for tax evasion

The Directorate General of Goods and Services Tax Intelligence (DGGI) has initiated a probe into possible tax evasion of ₹850 crore in 2020-21 and 2021-22 by some large commercial coaching centres and could soon issue show cause notices to them, said officials.

The investigation relates to misdeclaration of the number of enrolments and non-payment of tax to the exchequer after collection, they said.

The DGGI initiated the probe in January 2023, and has been looking into transactions of all large and mid-sized coaching centres across the country, according to officials.


"Authorities have detected rampant tax evasion and at least 145 large and mid-sized commercial coaching centres are under the scanner," one of the officials told ET on condition of anonymity. The list comprises academic coaching centres, including for medical and engineering entrance examinations as also test prep centres for IELTS and GRE.

"These centres are based in Delhi, Mumbai, Kota, Kolkata, Chandigarh, Chennai, Coimbatore and many other tier-2 cities.... There have been some arrests as well," the official cited above said, refusing to divulge the names of the coaching centres as the investigation is still underway.

Officials said that in many instances the coaching centres had collected goods and services tax (GST) at the rate of 18% on the tuition fees from their students, but did not deposit it. In some instances, the centres filed returns, claiming it as a tax exempt service, they said.

"In many cases they collected GST on the tuition fee and later waived it as discount to students, and the record of such students was not maintained in the returns filed," the official said, adding that it was a clear violation of provisions of Section 132(1)(d) under the CGST Act, 2017. The official said the data available with the department also revealed a mismatch in the earning reports of the coaching centres. The DGGI has also asked all zonal offices to compile a list of coaching centres which are not yet registered under the GST.