Fearing VAT, private schools jack up fees by 30%

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The managements of various private schools have increased tuition fees by up to 30 percent due to apprehensions that a new tax – Value-Added Tax (VAT) – will be levied on schools at the start of financial year 2011-12, Pakistan Today has learnt. Various private schools’ managements argue that as per the directives of Directorate of Private Educational Institutions Sindh (DPEIS), private schools cannot increase tuition fees once an academic year has started, and hence, fees have been increased at the start.
Interestingly, however, the administrations of private schools have increased tuition fees without informing the DPEIS. As per DPEIS rules, private schools can increase tuition fees by up to five percent at the start of an academic year, and if any school needs to further increase fees, they need approval from the directorate. During a survey conducted by Pakistan Today, many privately-run educational institutions had increased tuition fees on the premise of “inflation”.  
Chaudhry Ashraf, administrator of the Ghazali Grammar School in Model Colony, told Pakistan Today that the Centre has planned to impose VAT on education sector this year. He said the school management has increased tuition fees by up to 30 percent to cope with any crises in case of imposition of new tax. Describing other reasons of abrupt increase in fee, he said the school management has withdrawn the relaxation granted to parents at the time of admission.
He said the school has granted concession by up to 50 percent for increase in enrolment at the time of admission, but the school could not grant subsidy to needy students and has decided to withdraw all concessions. Private School Management Association (PSMA) President Shamsuzzaman, when contacted for comments, said that the abrupt increase in tuition fee due to a fear of VAT imposition is unjustified. He said the government is planning to bring privately-run educational institutions into the tax net, but fee increments before any decision are unjustified.
Last year, the government had decided to tax education sector, but later, withdrew from its own decision amid countywide protest. He claimed that if this suggestion is tried again, the managements of private schools would take to the streets. DPEIS Director Prof Mansob Siddiqui could not be reached for comments.