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IIT Delhi Slapped with Rs 120 Crore GST Notice on Research Funds, Alleged ‘Tax Terrorism’
The Indian Institute of Technology-Delhi (IIT-D) has received a show-cause notice from the Directorate General of Goods and Services Tax (GST) Intelligence. This notice demands a GST payment of Rs 120 crore related to research funding obtained during the period from 2017 to 2022, along with interest and penalties, as reported by The Times of India. IIT-D has been given 30 days to respond and justify why the amount, including any associated penalties, should not be enforced.
According to the report, several other educational institutions, including central universities, IITs, and state-owned as well as private universities, have also received similar notifications from GST authorities. Although IIT-D has not yet officially responded to the notice, many experts have voiced concerns about the GST regime.
Mohandas Pai, former CFO of Infosys and a well-known figure in the industry, called the action “tax terrorism” in a post on X (formerly Twitter), tagging Prime Minister Narendra Modi. He wrote, “GST demand on IIT-Delhi’s research grants sparks controversy over taxing education. PM @narendramodi Sir, is this another instance of tax terrorism at its worst? What is happening with @gstindia and @cbic_india? Is there no limit to this tax harassment? Sad.”
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A senior official from the Ministry of Education hinted that the notice might be based on a misunderstanding, noting that research funded by the government should not be subject to GST. The official emphasized the importance of supporting research initiatives rather than treating them as taxable entities.
Echoing this sentiment, the head of a privately deemed university described the imposition of GST on research funds as a “major setback” for the development of Indian higher education. The individual criticized the finance ministry for not recognizing that much of the research funding is used for purchasing consumables and assets that are already subject to GST.
This situation isn’t unique to IIT Delhi. Mahindra Holidays & Resorts India also recently disclosed receiving a demand notice for Rs 16.77 crore, including penalties, from tax authorities. The company is currently exploring legal options to challenge the notice. Additionally, Infosys revealed receiving a notice amounting to Rs 32,403 crore from GST authorities concerning services utilized from its overseas branches over a five-year period starting in 2017. Infosys referred to this as a “pre-show cause” notice and stated that it believes these expenditures should not be subject to GST.
The issuance of these GST notices has sparked widespread debate on social media platforms like X, with many experts calling for reforms to GST norms.