There cannot be a time more appropriate than this to recall my favourite English class in school on Charles Dickens’ Oliver Twist. Oliver’s famous “Please, sir, I want some more” still rings in my ears whenever I feel a sense of starvation. The blow Oliver got in return sent shivers in our class 30 years ago, but that doesn’t deter me from asking for more now and so I ask, “Dear FM, I want some more.”
Those working in the educational policy industry are aware of the sandwiched position of education in the concurrent list and there is little room for a Central law to create national impact. Service tax in educational institutions is one such little room that can be designed to look like a palatial bungalow. There is no denial of the fact that tax laws are meant to levy tax and administer collection to ensure government meets its expenditure. However, on the issue of timing, service tax on research and Annual Maintenance Contract (AMC) in educational institutions needs a rethink.
It is with great pride that we should acknowledge the growing presence of Indian institutions in many of the recently released world university rankings. Though we may not have a dominant presence, the rise of India is becoming visible and needs to be nurtured. Research and the quality of teaching-learning mechanisms is an important parameter in any ranking exercise. In a recent written reply, Y S Chowdary, Minister of State for Science and Technology and Earth Sciences, informed the Rajya Sabha that India’s research performance in science and technology has improved significantly over the past years. The scholarly output has grown at a rate of 13.9 per cent as against the world average of 4.1 per cent during 2009-13. India’s global citation impact in scientific research has increased to 0.75 during 2009-13 from 0.68 during 2006-10, whereas the world average is 1.0. India’s scholarly output increased to 1,06,065 papers in 2013 from 62,955 in 2009. This was also previously shared in the Lok Sabha by Minister for Science and Technology and Earth Sciences, Dr Harsh Vardhan. The rate at which research is progressing, the number between 2013 and 2017 can only get better, thanks to various schemes of the Departments of Science and Technology, Biotechnology, HRD Ministry and other agencies. Such progress needs enhanced nourishment and one source for Vitamin ‘M’ is the service tax exemption to educational institutions.
Research in educational institutions is undertaken either through government/private grants or through research contracts. While the former has no service tax, research contracts attract service tax, increasing the unit cost of research. The latest budget’s announcement to gradually withdraw the weighted tax deduction for donation to research institutions is also a dampener. Both of these have the propensity to pull down corporate-funded research, a necessary ingredient to build strong industry-institution research collaboration. Another important issue is the service tax on AMC. The revenue model built around this killer source of income is monstrous in its size. It is understandable that AMC needs to be service-taxed, but AMC without any doubt needs to be included under auxiliary services insofar as educational institutions are concerned and exempted from service tax. This not only reduces research costs (which involves high-end equipment requiring AMC), but also unit cost of education since teaching infrastructure in schools and colleges are huge and need AMC.
When Oliver asked for more, he got a blow, and when it’s my turn to ask the FM for more, I hope the chances are bright from its glow. vaidhya@sastra.edu
Dean (Planning & Development), SASTRA University