IIT Delhi gets GST notice, Mohandas Pai calls it tax terrorism, writes to PM Modi

Indian Institute of Technology-Delhi (IIT-D) has been issued a show-cause notice by the Directorate General of Goods and Services Tax (GST) Intelligence. The notice pertains to a demand of Rs 120 crore in GST from IIT-D on research funding obtained during the period from 2017 to 2022, alongside interest and penalties, The Times of India reported.

The notice serves IIT-D a deadline of 30 days to provide justification as to why the specified amount and any associated penalties should not be enforced. It is noteworthy that various other educational institutions, encompassing central universities, IITs, as well as state-owned and private universities, have also been recipients of analogous notifications from the GST authorities, as per the report.

While IIT-D is yet to react to the notice, many experts expressed their dissatisfaction with the GST regime. Reacting to the development,

Reports from governmental sources have indicated that esteemed educational institutions across India, including prominent Indian Institutes of Technology (IITs), central universities, as well as state-affiliated and private universities, have recently received similar notifications from GST authorities.

Mohandas Pai, former CFO of Infosys and a prominent industry voice, called it tax terrorism and tagged PM Narendra Modi in his post on X (Twitter).

He wrote: "GST demand on IIT-Delhi's research grants sparks controversy over taxing education PM ⁦ @narendramodi
⁩ Sir Again tax terrorism at its worst? What is happening with ⁦ @gstindia
⁩ ⁦ @cbic_india? Is there no limit to tax terrorism? Sad"

 

 

A senior official in the Ministry of Education said that a formal reply to the notification is currently in progress. This hints towards a possible misinterpretation of the situation, as the official opinion is that Goods and Services Tax (GST) should not be applicable to research endeavors funded by the government, as outlined in the report.

“We believe this is a misinterpretation. In our view, GST should not be imposed on government-funded research. Regrettably, such notices are issued. We ought to encourage and support research rather than seeing it as a taxable entity.”

Reacting to the development, the head of a private deemed university said, “Implementing GST on research funds to universities is a ‘major setback’ for the growth of Indian higher education institutions. The finance ministry has failed to notice that a significant amount of the money is being utilised to buy consumables and assets that are already covered by GST.”

Not just IIT Delhi, many other companies and institutions have got GST notices. Earlier this week, Mahindra Holidays & Resorts India revealed that tax authorities have issued a demand notice of approximately Rs 16.77 crore, which includes a penalty. The company is currently in the process of undertaking necessary legal steps to seek remedies before the relevant authority concerning this matter.

In a separate incident, GST authorities have imposed a notice amounting to Rs 32,403 crore on Infosys for services utilised by the company from its overseas branches over a period of five years commencing in 2017. Infosys addressed this notice as a 'pre-show cause' notice in a stock exchange filing and expressed its belief that GST does not apply to these expenditures.

Many experts and users took to X and expressed their views on GST norms and talked about reforms.