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Fees charged for government research work is GST exempted, rules AAR

  • Oct 19, 2020 | Divita S Gupta

Fees charged for government research work is GST exempted, rules AAR

The Madhya Practices bench of the Authority for Advance Ruling has held that monies collected from other Government departments for the purpose of conducting research work or any studies conducted for the purpose of making policies shall be exempted under the Goods and Services Tax. The applicant, the Atal Bihari Vajpayee Institute of Good Governance & Policy Analysis had approached the Madhya Pradesh AAR seeking an advance ruling on whether the amount recovered by them from other government departments for doing research work and studies, which helps them make policies or understand its impact, is chargeable under GST. It also wanted to clarify if services provided by the applicant to other government departments are covered under the entry No. 8 of Notification No. 12/2017 Central Tax (Rate) dated 28th June 2017.

The applicant is established as a Society, registered under the MP Society Registrikaran Act of 1973 and is a part of the Department of Public Service Management under the State Government of Madhya Pradesh. This institute is presided over by the Chief Minister of Madhya Pradesh. 

For the purpose of policy design and its impact, the institute regularly associates with experts from different domains of subject matter expertise. These experts are generally hired from institutions like IIT/IIM or are experienced senior or retired senior officers. The institute during the duration of the associate provides such experts with all the requisite resources and facilitates remuneration and entitlements as per government rules. 

The MP AAR ruled that projects undertaken by the applicant are in relation to the functions entrusted to Municipalities under Article 243 W and to panchayats under Article 243G of the Constitution, and, therefore, are exempt from the tax being covered under Sr. No. 3 of Notification No 12/2017 CTR dated 28th June 2017 issued under Central Goods and Services Tax Act, 2017 and corresponding notifications issued under the Madhya Pradesh Goods and Services Tax Act, 2017.

Avalara helps businesses of all sizes get GST return filing, e-way bill generation and e-invoicing right with cloud-based GST compliance solutions in India. Goods and Services Tax (GST) rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Avalara Author
Divita S Gupta
Avalara Author Divita S Gupta
Divita has served as a writer and editor for top financial services organizations in India. She has written on topics like mutual funds, insurance, taxes, SME financing for globally recognized banking and financial organizations including ICICI, Aditya Birla Group, News Corp. With a Masters in Business Administration from Symbiosis International University, she currently owns a small business in Mumbai.

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