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Should placement tax be imposed on IITs, IIMs?

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August 30, 2006 14:05 IST
Premier educational institutes like the Indian Institutes of Management and the Indian Institutes of Technology may be taxed for the placement charges they receive from companies.

Placement charges vary at IIMs: for example, at IIM-A multinational firms are charged $5,000 for every student that the MNC picks from IIM-A. Indian companies are charged from Rs 40,000 to Rs 1.75 lakh for interviewing students -- depending on which day the firms want to hold the interviews. Besides, Rs 50,000 per student too is charged for every student placed with Indian firms.

Placement services were brought under the service tax net from 1997, but this order was applicable only to commercial firms. The changes brought about this year implied that even educational institutions getting placement charges from companies will have to pay service tax. These changes were made after the Comptroller and Auditor General of India objected to educational institutes not paying service tax on placement charges.

The Central Board of Excise and Customs is now carrying out a survey to find out whether educational institutes are liable to pay such a charge prior to May 1, 2006.

The survey is being carried out after IIM-Bangalore won an appeal against imposition of the tax. IIM-Ahmedabad was also issued a show cause notice by the service tax department and is yet to receive a ruling in its favour.

What are your views on placement tax? Do you think IIT s and IIMs should be taxed for placements? Tell us!