Despite a request from the state's public universities for exemption in levying Goods and Services Tax (GST) on the affiliation fees paid by colleges, the state's tax authorities have refused to provide them with any respite.

In a letter to all non-agriculture universities last month, the state higher and technical education department conveyed that there's no provision for any exemption for affiliation fees from GST. The department has cited an earlier communication from the state GST department on the applicability of taxes on the affiliation charges.

The public universities were taken aback when a few months ago they received letters from the state tax authorities seeking information about non-payment of GST on affiliation fees. Believing that taxing affiliation fees will ultimately make education costlier to students, the varieties took the issue up with the state governor and chancellor of all the state universities Ramesh Bais, who assured them to take the issue up with the GST council.

The affiliation fees, which universities get from educational institutes for starting new colleges and courses as well as for the continuation of existing programmes, remain one of their major revenue sources. The University of Mumbai (MU), which has 904 affiliated colleges, charges between Rs25,000 to Rs2.5 lakh for starting new institutes and courses, the annual extension of affiliation and adding new divisions or additional intake capacity.

In its letter to the state finance department denying any tax relief on affiliation fees, the joint commissioner of state tax referred to the administrative instructions issued by the state tax commissioner in February, proclaiming that these payments are liable for 18% GST. Through this communication, zonal additional commissioners were directed to ensure tax compliance by varsities.