Karnataka universities reel under GST shocker
Jun 8, 2026
Government mandates higher education institutions to levy and forward tax on college affiliation charges, sparking concern that escalating costs may ultimately burden students financially
Universities in the state, already struggling with a severe shortage of faculty and inadequate government funding, are now staring at a fresh financial crisis following a directive to pay Goods and Services Tax (GST) on affiliation fees collected from colleges. The state government has instructed universities to calculate and remit 18 per cent GST on affiliation fees paid by affiliated colleges from 2017-18 onwards, following a clarification from the Central Board of Indirect Taxes and Customs (CBIC) that such fees do not qualify for GST exemption. The move has triggered alarm among university administrators and educationists, who fear the financial burden could eventually be passed on to students.
For nearly nine years, GST payment on affiliation fees had remained on hold amid ongoing debates on whether educational institutions should be exempt from the tax. However, after the CBIC clarified that affiliation fees are taxable, the state government directed universities to recover pending GST dues dating back to 2017-18. Universities have now begun issuing notices to affiliated colleges, demanding payment of 18 per cent GST on fees already paid over the past several years.
Education experts have strongly criticised the decision, calling it impractical and unscientific. “Affiliation fees are collected by colleges based on student strength and courses offered and the amount is typically recovered from students as part of their academic expenses. While colleges could have factored GST into fees had it been mandated from the beginning, asking institutions to pay tax retrospectively on fees collected nearly a decade ago has created confusion and hardship,” said a university official on condition of anonymity.
Several colleges have reportedly already received notices demanding lakhs of rupees in GST dues. A college chairman, requesting anonymity, said his institution had been asked to pay Rs 6.8 lakh as GST arrears. “Students who paid those fees completed their education years ago. How are colleges expected to recover that money now?” he questioned.
The issue is particularly worrying because many colleges have already shut down in recent years due to financial difficulties, including their inability to pay affiliation fees. Institutions now face the prospect of paying GST on amounts collected from students who are no longer enrolled. University officials say they are in no position to absorb the liability themselves. Many state universities are already struggling to fund infrastructure maintenance, meet operational expenses and pay pensions to retired employees.
Responding to the controversy, Karnataka University Vice-Chancellor Prof AM Khan said universities had only collected affiliation fees from colleges and had not accounted for GST on those payments. The government’s direction to pay 18 per cent GST on fees collected since 2017-18 has placed a substantial burden on universities, he said. Prof Khan added that universities are preparing to approach the government seeking relief, citing Supreme Court observations that educational institutions should not be subjected to GST.
In some cases, individual universities may have to pay more than Rs 2 crore in GST arrears. Until clarity emerges, colleges remain caught between government orders and mounting financial pressure, with concerns growing that students may ultimately bear the cost.
[Bangalore Mirror]
