Palike to levy tax on schools, colleges

Palike moves: When they can pay IT, why cant they pay service tax?
Last Updated : 29 October 2010, 18:51 IST
Last Updated : 29 October 2010, 18:51 IST

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Palike Commissioner Siddaiah told the Council Meeting on Friday that many institutions in the BBMP limits paid Income Tax but were notpaying service tax. ThePalike intends to bring them in the service tax net, he said.

The matter came up when the Congress Corporator from Jayamahal ward Gunashekar questioned why the Palike should not bring rich educational and other profit-making institutes within the purview of service tax when the Palike is spending money to build infrastructures that is benefiting them too.

He suggested that service tax could also be imposed on the Bengaluru International Airport.

Siddaiah said he knew an institution that is spread across 100 acres of land and was paying income tax. "Why should they not pay service taxes?" asked Siddaiah.

He, however, said that bringing BIA within the service tax purview waas difficult as it does not come under the BBMP limits. But he maintained that the Palike had facilitated BIA with a smooth infrastructure.
Meanwhile, sources in the Palike said the institutions exempted under section 110 of the KMC Act would be subjected to service tax, regardless they make profit or loss. The charge will be levied according to the zones as mentioned under the Self Assessment Scheme.
DH News Service

‘Proposal will adversely affect students’

Terming BBMP’s resolution on service tax as legally ‘untenable’, the Karnataka Unaided Schools’ Management Association (KUSMA) said the civic agency cannot levy the tax without amending the Karnataka Municipal Corporations Act, 1976.

Stating that private schools will oppose the move even if the BBMP secured it legally, KUSMA Chairman Krishna Iyer said levying any service tax on educational institutes would be ‘unfair’.

“The resolution has apparently been passed with the premise that schools are making profit. Even if they are doing so, they have been paying the income tax. Those who don’t, have obtained exemption under Section 80 G of the Income Tax Act, 1961,” Iyer told Deccan Herald.

He also said that the proposal was a ‘first-of-its-kind’ mooted by any civic body in the country. “Most schools were given land by the Bangalore Development Authority (BDA) under community service quota. Hence, they pay an annuity of Rs 15,000-35,000 to it every year,” he added. Schools will challenge the move in the court if it was legislated, he said.

Princess Franklyn, Principal, St John’s High School, was of the opinion that taxes should be levied on schools based on the number of students, facilities provided, and fees charged. “Schools may oppose the move. The general perception is that schools make lot of money. We’ll have to wait and watch,” she said.

Condemning the proposal, the Pro Vice-Chancellor of a city college said that it would affect the students adversely. “Colleges may have to pay hefty amount to BBMP if the move is implemented. In the long run, colleges will be forced to charge extra fee from students,” he said.

“It is not the right kind of move. Education is a social service. There are no extra benefits from the Government. Engineering colleges have already given up 50 per cent seats. We need to take the issue to the concerned people,” K N Balasubramanya Murthy, Principal, PES Institute of Technology, said.

Published 29 October 2010, 18:44 IST

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