The Directorate General of Goods and Services Tax Intelligence (DGGI) has reportedly launched an investigation into potential tax evasion worth ₹850 crore by certain large commercial coaching centres. Officials indicate that show-cause notices could soon be issued to these entities for their alleged misconduct.
What Happened: The focus of the inquiry revolves around the misrepresentation of student enrollment figures and the subsequent failure to remit taxes to the government after collection during 2020-21 and 2021-22, officials told the Economic Times.
This investigation, initiated in January 2023, encompasses transactions conducted by various large and mid-sized coaching centres nationwide.
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An official told the business daily the investigation has uncovered widespread tax evasion, with about 145 commercial coaching centres coming under scrutiny. These establishments include academic coaching centres catering to medical and engineering entrance examinations, as well as preparatory centres for competitive exams such as IELTS and GRE.
Widespread Problem: The centres under investigation are in cities like Delhi, Mumbai, Kota, Kolkata, Chandigarh, Chennai, Coimbatore and several tier-2 cities. While some arrests have been made in connection with the probe, the names of the coaching centres are being withheld pending the ongoing investigation, the sources said.
Officials revealed that many coaching centres collected GST at an 18% rate on tuition fees from students but failed to remit the amounts collected to the government. Additionally, some centers falsely claimed tax exemption on their services in their returns.
Unsavoury Methods: In certain instances, centres reportedly collected GST on tuition fees and subsequently waived it as a discount to students, without maintaining proper records of these transactions in their filed returns.
The DGGI, based on available data, has allegedly also identified discrepancies in the earnings reported by these coaching centres. Furthermore, all zonal offices have been instructed to compile a list of coaching centres that are not yet registered under the GST regime.
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