Serv Tax on Spoken English Classes

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Anwar Shaikh (Querist)
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03 February 2010 Hi,

Can you please tell me whether there is any exemption for Service tax for English & Other Foreign languanges teaching Classes

CA RAMESH KUMAR AHUJA

CA RAMESH KUMAR AHUJA (Expert)
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03 February 2010 No. Some of the Institutes engaged in such activities do claim exemption under notification no 24/2004 as a vocational Institute/course. However, Circular No 107/2009 issued in this regard has clarified that this is not a vocational course and as such not exempt from service tax. Relevant Extracts of Circular No 107 are as per under:

VOCATIONAL TRAINING INSTITUTE

The vocational training institutes are exempted from service tax vide notification no. 24/2004-ST, dated 10.09.2004 (as amended). By definition, such institutes should provide training or coaching that imparts skill to enable the trainee to seek employment or undertake self-employment, directly after such training or coaching. Disputes have arisen in respect of institutes that offer general course on improving communication skills, personality development, how to be effective in group discussions or personal interviews, general grooming and finishing etc. It is claimed that such training or coaching improves the job prospects of a candidate and therefore they are eligible for exemption as â€˜vocational training institutes. However, a careful reading of the definition shows that the exemption is available only to such institutes that impart training to enable the trainee to seek employment or self-employment. The courses referred to above do not satisfy this condition because on their own such courses do not prepare a candidate to take up employment or self-employment directly after such training or coaching. They only improve the chances of success for a candidate who already has the required skill. Therefore, such institutes are not covered under the exemption.

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