26 July 2024
Here's how to handle the service tax in each case, given a coaching institute scenario where a student gets a 50% scholarship and the service tax is 10,300 Rs on a tuition fee of 1L Rs:
### **Understanding the Scenario:**
- **Total Tuition Fee (before scholarship)**: ₹1L - **Service Tax Rate**: Assuming the service tax rate is 10.3% (as of the period you mentioned). - **Service Tax Amount**: ₹10,300
**50% Scholarship**: Reduces the fee to ₹50K
### **Service Tax Calculation**
The service tax should be charged on the amount actually paid by the student, which is the amount after the scholarship is applied. Here’s how it applies in each case:
### **Case 1: If the Student Has Not Yet Paid the Fees**
Since the student has not paid the fees yet and has been granted a 50% scholarship:
1. **Original Fee**: ₹1L 2. **Fee after 50% Scholarship**: ₹50K
The service tax should be calculated on the ₹50K (i.e., the amount the student is actually required to pay):
**The student should be refunded the difference between the service tax originally paid (₹10,300) and the revised service tax (₹5,150):**
- **Refundable Service Tax** = ₹10,300 - ₹5,150 - **Refundable Service Tax** = ₹5,150
**In this case, the student should receive a refund of ₹5,150. The correct service tax is ₹5,150.**
### **Summary**
1. **Case 1**: Service tax payable = ₹5,150. 2. **Case 2**: Service tax payable = ₹5,150. 3. **Case 3**: Refund of ₹5,150 is due if the full fee was paid before the scholarship was granted.
These calculations are based on the assumption that the service tax rate is 10.3%. Adjustments should be made if the service tax rate has changed. Additionally, make sure to follow any specific guidelines or rules issued by the relevant tax authorities regarding the application of service tax on fees and scholarships.
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