At the 54th GST ( Goods and Services Tax ) Council meeting, chaired by Finance Minister Nirmala Sitharaman, a key decision was made to exempt research funds received by universities, research institutions, and income tax-exempt institutions under both the State and Central governments from GST.
The GST Council has recommended an important exemption for the supply of Research and Development ( R&D ) services provided by specific institutions.
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Under this recommendation, R&D services offered by a Government entity, research association, university, college, or other institution notified under clauses (ii) or (iii) of sub-section (1) of section 35 of the Income Tax Act, 1961, will be exempt from GST if funded through government or private grants.
It was clarified that the past demands to be regularised on ‘as is where is’ basis.
This exemption is to promote research and innovation by reducing the tax burden on educational and research institutions, enabling them to focus their resources on core R&D activities. The recommendation applies to a broad range of institutions involved in scientific and industrial research, many of which depend on grants to carry out their work.
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Delhi Finance Minister Atishi earlier stated that she will raise concerns about the imposition of GST on research grants at the 54th GST Council meeting to be conducted on 9th September 2024. The GST Council, chaired by Finance Minister Nirmala Sitharaman, includes state finance ministers.
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