Fiscal Department stores Rs 50 crore notification at Mumbai University, saying it makes a profit

MUMBAI: Is Mumbai University a public varsity? The income tax department doesn’t think so. Labelling it a private profiteering enterprise, the department has slapped a Rs 50-crore notice on MU. The liability is expected to mount as the university makes more revenue than it expends every year.

Between 2006-07 and 2012-13, the tax amount assessed on the University’s income stands at Rs 48 crore as per the notice dated March 2018. While the matter is pending before the commissioner of income tax (appeals), Mumbai University has already paid Rs 50 lakh.

The University has appointed an internal auditor to look into the matter and present the University’s standpoint. “The auditor and the University lawyer will present the University’s argument before the commissioner of income tax,” said a university spokesperson.

There’s a lot at stake for the MU. If it loses this battle, it means coming under the tax net forever.

Public institutions that receive more than 51% of their grant from the state are not liable to pay tax. But with the growing annual budget and dwindling public finance, the odds seem stacked against the varsity. Besides, the University’s case could be weakened if it is established it spends only 90% of the income from revenue it receives in the form of affiliation fees, exam fees, revaluation charges, said a source.

“We have been fighting this case and making an argument that as a state University we are not liable to pay tax,” said a former in-charge vice-chancellor.

The I-T department’s contention is the University has an annual budget of Rs 200 crore of which the state’s annual grant is merely Rs 20 crore.

“That kind of state funding, of about 10% according to the income tax officers, does not make us a public institution that can be exempted from tax,” said a university faculty.

“While it is true the state gives us less than 50% funding, if one were to monetise or put a value to the nearly 230 acres of land the government has given us, it would be enough to establish the state’s sponsorship,” said professor Abhay Pethe from the Mumbai School of Economics and Public Policy.