Coaching Centres slapped with DGGI Probe for GST Evasion

The Directorate General of GST Intelligence (DGGI) has launched an investigation into alleged tax evasion of Rs.850 crore by several large commercial coaching centres in 2020-21 and 2021-22, and authorities said they may issue show cause notices to them soon.

They stated the investigation was about misdeclaring the number of enrolments and failing to pay tax to the exchequer once it was collected.

According to officials, the DGGI launched the probe in January 2023 and has been investigating transactions at all big and mid-sized coaching centres across the country.

“Authorities have detected rampant tax evasion, and at least 145 large and mid-sized commercial coaching centres are being investigated,” one of the officials said on condition of anonymity.

The list includes academic coaching centres for medical and engineering entrance exams, as well as test preparation centres for IELTS and GRE.

“These centres are located in Delhi, Mumbai, Kota, Kolkata, Chandigarh, Chennai, Coimbatore, and numerous other tier-two cities… There have also been some arrests,” stated the above-mentioned official, who refused to provide the names of the coaching institutes because the investigation was still ongoing.

Officials stated that in many cases, coaching centres collected goods and services tax (GST) at the rate of 18% on tuition fees from students but did not deposit it. According to them, in some cases, centres submitted returns stating that their services were tax-exempt.

“In many cases, they collected GST on the tuition fee and later waived it as a discount to students, and the record of such students was not maintained in the returns filed,” the source stated, adding that this was an obvious violation of Section 132(1)(d) of the CGST Act, 2017.

The source stated that the data provided to the department also revealed a discrepancy in the earning figures of the coaching centres. The DGGI has also directed all zonal offices to produce a list of coaching centres that have not yet registered for GST.