VTU University carelessness forces it to pay 210 crore as Income Tax

Bangalore, 27 September 2012: Visvesvaraya Technological University (VTU) has to pay the penalty of 210 crore as Income Tax (IT) seemingly for the negligence of four vice-chancellors who ignored applying for IT exemption, which is mandated for all state universities.

The Income Tax department has issued a notice to VTU, directing the authorities to pay taxes to the tune of 210 crore. The university was established in 1998 and has seen four vice-chancellors (Balaveera Reddy served for two terms and the current vice-chancellor H Maheshappa is the fifth vice-chancellor). None of them tried to save the university from paying such huge taxes-only because they neglected applying for an exemption.

As per Income Tax Act’s Section 10 23 C, all state universities must get IT exemption. But VTU has not yet taken advantage of that benefit. However, after receiving the notice from IT department, the varsity authorities have only now applied for IT exemption and filed a case before the Dharwad court.

Senior officials in the IT department in Belgaum said, “The university should have taken the exemption under the Section 12 A and Section 18 G and also under Section 10 23 C. But they were careless over all these years; that’s why an amount of 210 crores tax has to be paid by them. We feel they are doing business and not running an institution.”

H Maheshappa, VTU vice-chancellor, said in his defense, “The tax due was for the period between 2005 and 2010, and was not under my term. Now we have started procedures for getting the I-T exemption and we have also filed a case on this.” This issue was raised even in the executive council meeting held at VTU’s Belgaum campus this Friday. According to the executive council members, the tax the IT department is directed to pay is on the VTU’s corpus fund.

“There is about 400 crore corpus in the university, and the I-T department calculated the tax based on that. The tax is applicable from the day they started getting funds for the corpus,” said RK Somashekar, statutory officer and executive council member of VTU, who is also the registrar of evaluation at Bangalore University. Every year, VTU gets 45 crore to 50 crore from Karnataka Examinations Authority (KEA) towards its corpus.

“The vice-chancellor asked for the council members’ opinions on using the corpus fund and so that they can reduce the risk of paying tax. But I opposed it because when the matter is in court we cannot touch the corpus fund. However, in the earlier meeting it was agreed in principle,” said Somashekar.

However, vice-chancellor Maheshappa has got the permission from the state’s higher education department to use the corpus. As part of the permission, Maheshappa is also in possession of a letter from the department, permitting the varsity to use.

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