23 July 2014
sir, We are conducting training program in college as part of there regular studies. In that way we get Rs 1,00,000.00.I would like to know their any income tax problem in this transaction Kindly advise the same Thanks®ard binu
26 July 2014
Dear sir, I would like to know whether college income get any exemption .if get can you share appropriate section or notification .while we receiving Rs 1,00,000. there is no TDS / Service tax is deducted .kindly help to solve this problem
29 July 2024
In India, the taxation of income received by educational institutions, such as colleges, varies based on the nature of the income and the applicable laws. Here’s a detailed explanation regarding the exemptions and the applicability of TDS/Service Tax for such institutions:
### **Exemptions for Educational Institutions**
1. **Income Tax Exemption for Educational Institutions:**
- **Section 10(23C) of the Income Tax Act, 1961:** - **Section 10(23C)(iiiad):** Income of educational institutions run by a charitable trust or society and whose annual income does not exceed ₹1 crore is exempt from income tax. - **Section 10(23C)(iv):** Income of institutions recognized by the government and engaged solely in educational activities is also exempt, provided they meet certain conditions and are not for profit. - **Section 10(23C)(v):** Income of institutions whose primary purpose is the education of students is exempt if the institution is supported by the government or receives donations from the public.
**Conditions for Exemption:** - The institution must be registered as a charitable trust or society. - The income must be used for educational purposes and not for profit. - The institution must comply with the prescribed conditions and maintain proper books of accounts.
2. **TDS Applicability:**
- **Income Received from Government or Local Authorities:** - Payments made by the government or local authorities to educational institutions are generally not subject to TDS, especially if the payments are for services rendered as part of their primary activities.
- **Other Payments:** - If the educational institution receives payments for services or other non-educational activities, TDS provisions may apply based on the nature of the income. For example, if the institution earns interest income, it would be subject to TDS under Section 194A if the interest exceeds the specified threshold.
3. **Service Tax (Pre-GST Regime):**
- **Educational Services Exemption:** - Under the Service Tax regime (prior to GST), educational services provided by recognized educational institutions were exempt from service tax. This exemption included tuition fees and other educational services rendered by these institutions.
4. **GST (Post-GST Regime):**
- **Educational Services Exemption:** - Under GST, services provided by educational institutions for the purpose of education are exempt from GST. This includes: - Services by an educational institution to its students. - Services by way of conducting entrance exams or other educational activities. - Services provided by institutions recognized by the government.
### **Relevant Sections and Notifications:**
1. **Income Tax Act:** - **Section 10(23C):** Provides exemptions for income earned by educational institutions. - **Section 11 & 12:** Deals with income from charitable activities, including educational institutions.
2. **GST Notifications:** - **Notification No. 12/2017-Central Tax (Rate) dated 28th June 2017:** Lists services provided by educational institutions as exempt under GST.
### **Handling Rs. 1,00,000 Received:**
- **Income of College/Institution:** If the ₹1,00,000 received by the college is part of its regular educational income and is used for educational purposes, it should typically be exempt from income tax under the relevant sections provided above. - **No TDS/Service Tax Deducted:** If no TDS or service tax is deducted, it could be due to the nature of the income (e.g., educational services provided by a recognized institution) or the exemption provisions applicable to the payment.
### **Conclusion:**
Educational institutions may be exempt from income tax on their income if they meet specific criteria outlined in Section 10(23C) of the Income Tax Act. They may also be exempt from TDS on certain types of payments, and educational services are generally exempt from GST. It is crucial to ensure compliance with all regulatory requirements and maintain proper documentation to substantiate these exemptions.
For accurate and detailed guidance, including the application of these provisions to specific cases, it is advisable to consult with a tax professional or financial advisor familiar with educational institutions’ taxation.
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