Govt's plan to levy placement tax may not face resistance
August, 23rd 2006
The government's plan to levy 12% service tax on placement services offered by management and engineering institutes will not face any resistance from the institutes concerned should it fall into place. Such was the response of a cross-section of people from such institutes that ET spoke to.
Most B-school sources said to felt that the extra 12% was a mere drop in the bucket for the companies which came for campus recruitments.
However, at the same time, they were of the opinion that the service tax collected from taxing placement services at these institutes would be a paltry sum, and educational institutes should be left out of its ambit.
Even IIM Ahmedabad (IIM-A) and IIM-B who had contested the move when they were issued show-cause notices in March by the service tax department, are now willing to go along with the governments plan, should it be implemented.
According to Prof P K Sinha, chairman, placements, IIM (A), "This plan will have no major repercussions because the companies who come to campus are already used to paying service tax. Earlier, we had contested this, feeling that the IIM is not a recruiting agency, but now, if it is a government ruling, we will abide by it."
So also feels Prof S Mukherjee, chairman, placements, IIM (B) who says that the institute will not even pass on the service tax burden to the corporates.
Most IITs like IIT Roorkee and IIT Kharagpur, incidentally, do not charge companies any placement fees.. Neither do premier management institutes like XIM, Bhubaneshwar or even TAPMI, Manipal. TAPMI, however, has a scheme, wherein any corporate who comes recruiting can pay a voluntary contribution of Rs 20,000 per candidate.
This should not fall under the ambit of service tax but should it do so, we will pay up, said Prof D Nagabrahmam, director, TAPMI.
At the end of the day, though, while none are willing to go against the law of the land, most are unhappy about the concept of a service tax levied on placement services of educational institutes.
Most educational institutes are not in the business of making profit, so why should they be treated as commercial organisations, sums up Abhishek Saha, external relations secretary, IIM(C).