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Campus recruitment under taxman's scanner

Ashok Dasgupta

Service tax applicable to recruitment or supply agency: Central Excise

NEW DELHI : Campus placements have come under the tax net. Business schools and premier technology institutions of the likes of IIMs and IITs will have to cough up service tax from May this year in case they charge companies a placement fee for campus recruitment. A Central Board of Excise and Customs (CBEC) here on Wednesday, says such placement services rendered by the premier institutes are liable for payment of service tax at the rate of 12.2 per cent.

It said educational institutions such as the IIMs and IITs charge corporate houses or MNCs who come to these institutes for recruiting candidates through campus interviews a fee. There was some confusion earlier as to whether these educational institutions came under the category of `manpower recruitment supply agency,' and, accordingly, whether service tax can be levied on placement fee.

The CBEC circular has made it clear service tax was applicable for the activity of manpower recruitment or supply agency. Given the fact that most educational institutes do not have profit as the primary motive, they were not covered under the taxable service definition earlier.

The CBEC, however, has left the issue of levying tax on IIMs and IITs to the discretion of field formations.

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