The revenue authority has asked the private universities and medical and engineering colleges to register as VAT-paying entities immediately.
These educational institutions have been told by the National Board of Revenue (NBR) to submit their monthly VAT returns to the relevant circle offices in their areas by August 15.
This means three things. First, these institutions will have to register as VAT-paying entities by that date. Second, they will have to submit monthly returns on the VAT they had collected by providing services in the month of July, also by that date.
And third, they are now liable to submit monthly returns of VAT on the fees collected from students in June as well. According to a government notice, this has to be done because the regulation became effective on June 4 when the FY2015-16 budget was announced in parliament.
An SRO (statutory regulatory order) issued by the NBR on July 1 listed these private tertiary education providers as liable to pay 7.5% VAT starting this fiscal year.
When contacted, Sheikh Kabir Hossain, president of the Association of Private Universities of Bangladesh, told the Dhaka Tribune yesterday that they have a meeting on Tuesday, August 4 and he would be able to make their position clear after that.
The Dhaka Tribune also contacted Mohammad Abdul Majid, former chairman of the NBR.
Asked whether NBR circulars to the private universities mean that they are now bound to pay the VAT, he said he should not make any comment without seeing the circulars.
“However, there are still scopes for the government to review the decision. If the authorities want, they can make a new summary and send it to the Law Ministry for vetting. If they get the vetting, they can issue another SRO and revoke the VAT imposition. This practice is not rare.”
The former NBR boss also said: “There are many scopes for misunderstanding in the SRO that the government had issued. The SRO should have explanations in easy terms so that everyone, especially the students, understand everything.”
This is the first time the government has implemented a 7.5% value added tax (VAT) on the fees that private universities, medical and engineering colleges collect from students.
Other industries pay a uniform 15% VAT in Bangladesh, but these educational institutions are getting what is known as “truncated VAT.”
The initial budgetary proposal was for a 10% rate, but upon Prime Minister Sheikh Hasina’s recommendation, the rate had been later reduced.
Once before in 2010, the government moved to impose indirect tax on private tertiary education, but had to pull out in the face of student protests.
This time as well, educationists and guardians strongly opposed the move, saying the VAT will only mean that students will have to pay more. Several student groups have also been protesting since the government made the announcement about bringing private tertiary education under VAT.
Students roughly pay between Tk3 lakh and Tk7 lakh for a four-year graduation degree from a private varsity. The fee for the students of private med schools is Tk13.9 lakh, which was fixed by the government.
The amounts mainly include tuition, admission and registration fees; library card and ID card issuance fees; and certificate, transcript and testimonial withdrawal fees.
The Dhaka Tribune has learned six universities have already made preparations to submit the returns.
As per law, return of VAT collected or paid in one month has to be submitted to local revenue offices by the 15th of the next month, unlike income tax returns, which are submitted annually.
This reporter has obtained copies of a number of notices served by the VAT office to these institutions.
According to a notice – dated July 5 – issued from a field office under Customs, Excise and VAT Commissionerate, Dhaka (West), universities under its jurisdiction were asked to get VAT registration and send information related to fees and charges to the concerned revenue offices.
The commissionerate is relevant for areas including parts of Dhanmondi, Mirpur, Mohammadpur, Sher-e-Bangla Nagar, Pallabi, Kazipara and Shewrapara where a number of private universities are located.
Another notice – dated July 26 – was sent to the registrar of the American International University of Bangladesh (AIUB) from the office of the revenue officer of the Gulshan Circle 5 of Mohakhali.
The notice asked AIUB authorities to present VAT return by August 15.
This revenue office falls under the Customs, Excise and VAT Commissionerate, Dhaka (North) that collects VAT from organisations located in Uttara, Nikunja, Khilkhet, Mohakhali, Gulshan, Niketon, Banani, Baridhara, Banani DOHS, Mohakhali DOHS, Baridhara DOHS and the adjacent areas.
Sheikh Kabir Hossain, president of the Association of Private Universities of Bangladesh, said subsidising the education in some institutions and bringing others under VAT at the same time represents the government’s double standard.
“The guardians, mostly from middle-income background, will be affected by this additional burden. We do not support the imposition of VAT on education as it should be considered a fundamental right, not a commodity,” he said.
According to the University Grants Commission (UGC) and Bangladesh Private Medical College Association, there are now around 461,000 students at 83 private universities and over 20,000 students at 64 private medical colleges.
Protests
Meanwhile, students of several private universities have announced a set of programmes including placing a memorandum on August 6 to President Abdul Hamid seeking his intervention.
Under the banner “No VAT on Education,” they will place the memo as the government has not responded to their July 31 ultimatum for scrapping the regulation.
They will hold a rally at Shahbagh at 11am on that day 6 and raise their memo, said organisers.
Other programmes include organising a solidarity and cultural gathering at 3pm today at Shahbagh, collecting signatures from students from August 3-5, and protest programmes at all private universities on August 5.