GST on research grants? IIT Hyderabad Professor explains issue on X

Recently, a notice from the Directorate General of Goods and Services Tax (GST) Intelligence to the Indian Institute of Technology (IIT) Delhi, demanding Rs 120 crore in GST on research funding received between 2017 and 2022, has sparked a debate on whether government research institutions should be considered 'taxable entities'.

Reportedly, several educational institutions, central universities, well-known IITs and even state-run and private varsities have been the recipients of such notifications from the authorities at GST.

EdexLive reached out to a senior Professor at IIT Hyderabad, Mathukumalli Vidyasagar, whose tweet on the same was posted on social media platform X.

Explaining the issue, the professor wrote to EdexLive, “It is not a case of increasing GST on equipment retrospectively. Rather, the Government of India (GoI) seems to have decided that all R&D (Research and Development) grants are really service agreements, and should be subject to GST. Moreover, this decision is applied retrospectively. This is why educational institutions are getting these notices. It is not just IIT Delhi but also Anna University and others as well.”

As per a Times of India report, the premier institute based out of Delhi has 30 days to respond to the notice, as per a top official from the Ministry of Education.

This development has raised concerns regarding the future of educational institutions and research in India.

“So, research grants get reduced by a factor of 1/1.18, or roughly 0.85, meaning a 15% cut right off the top. Given that the present government (Versions 1 and 2) have already cut support for STEM (Science, Technology, Engineering, and Math) R&D, this is a further insult to the R&D community. Already we the hapless Indian researchers are struggling with abysmal support of 0.65% of Gross Domestic Product (GDP) spent on R&D, which is a pittance compared to Korea at 4.8%, China at 2.4% and so on," he told EdexLive.