Respected Sir,

Recently Cabinet has given its approval on the IIM bill, which will now soon be tabled in Parliament for making into law.  In the context of this recent development, we the students of IIMs' one year MBA program find it imperative to bring to your notice another change that is long due and much needed in the IIMs’ full time one year MBA program.

IIMs’ offer following programs:

1.    Two year full time residential program – for freshers and experienced professionals

2.    One year full time residential program – for experienced professionals

3.    Part time MBA programs

4.    Executive development programs

In the service tax exemption granted to MBA programs, the government has only covered the two year full time residential MBA program. This is a request to include one year full time residential MBA program into service tax exemption provision.

Government has excluded Executive Development Courses from Service tax exemption provision as these programs are meant for professionals who are in job and want to enhance skills. The company in which the professionals work sponsors these programs and hence the company makes the service tax payment on behalf of the professional for the course. Also these courses offer a certificate and do not offer Post Graduate Diploma in Management. 

It is believed (by many students) that while making the service tax exemption provision in the law for the MBA program, Government clubbed One year full time residential MBA program with Executive Development Courses as currently there is slight awareness on the one year full time residential MBA program offered by IIMs. One year full time residential MBA program is completely different from Executive Development courses and is rather similar to Two year full time residential MBA program in terms of education imparted as both have similar contact hours. Executive development programs at IIMs are normally sponsored by organizations therefore no impact of service tax gets transmitted to students directly. But in both two year and one year MBA course, students have no source of income i.e. salary, perks etc. The students have to make the service tax payment out of his/ her pocket, which is clearly an additional burden on the student taking the loan for completion of the course.

At present service tax is exempted from two year PGP course from IIMs. So we request our government to apply the same principle to one year MBA course in IIMs as one year MBA students also do not earn employment benefits.  

It is the policy of Government of India to make quality education available to the students without demanding undue service tax from them. The current demand of service tax in one year full time residential program hinders the objectives. It is hoped that the Government shall look into the matter and bring the much needed amendment in the law so as to remove current discrepancy in the law.

We look forward to your cooperation and early action on the above case.

Thank you,