New Delhi: The Goods and Services Tax (GST) Council, led by Finance Minister Nirmala Sitharaman, announced tax exemption for research grants in all the higher educational institutions and research centers. The proposal for this step came from the Central Government which was accepted by all the states.
Sitharaman stated that irrespective of the source of funding, whether public or private, no GST will be levied on funding arranged for academic and research purposes. Explaining the rationale behind this decision, the Finance Minister said that the research funding will eventually lead to the development of patents or climate-resistant seed varieties, and therefore it should not bear the burden of GST.
The discussion around GST tax exemption for research funding emerged from recent instances wherein several institutions including IIT-Delhi and state universities such as Anna University, received GST notices from the Directorate General of GST. The show-cause notices demanded GST on research grants that the institutions have received. Sitharaman clarified the situation and explained that the notices were sent by officers in case the research funding appeared to be a ‘quid pro quo arrangement’.
In its efforts to foster research and development in the country, the Central Government has also allocated funds for research through the budget and created the National Research Foundation.
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