IIMs hike placement fees up to 25%

Rising costs, service tax and recognition of their own increased brand value has prompted most Indian Institutes of Management (IIMs) to raise placement fees this season-- in some cases like IIM Kozhikode's-- even up to 25 per cent.

IIM Ahmedabad, in fact, has increased its placement fee this year after four years. It will charge all the companies a participation fee, which it was not charging so far. Around Rs 1.5 lakh will be charged to all the companies across different slots.

"We have not increased our fee because of the service tax but because our brand value has gone up. Also, our costs have multiplied," said professor Piyush Kumar Sinha, placement chairperson, IIM A. The IIM final placement season starts on February 27 and ends on March 13.

The levy of service tax too is instrumental in the placement fee hike in these premier management institutes. The Central Board for Excise and Customs (CBEC) has levied a 12.2 per cent service tax on the placement fee collected by the IIMs and IITs. IIM Ahmedabad, IIM Lucknow and IIM Indore have prepared themselves to pay the tax.

IIM Bangalore and IIM Calcutta, however, say they have not received any such directive.

"I am awaiting directions from the director and board of governors. After we receive a clear indication, the placement committee would decided on the issue. Most likely, the placement fee would remain the same this year," said S D Moitra, Chairman placement, IIM Calcutta. IIM Calcutta might still have the scope to appeal against the order, a professor said.

Professor Sourav Mukherjee, placement chairperson, IIM Bangalore said, "Since we won the appeal against the order and there has not been any subsequent directive, it's our understanding that we don't need to pay the service tax. But if the government levies charges, we will pay."

Placement charges vary at IIMs. Earlier, at IIM-A, for instance, multinational firms were charged between $5,000-$6000 (around Rs 2.25-2.70 lakh) for every student and Indian companies were charged Rs 40,000 to Rs 1.5 lakh for interviewing students, depending on the day slotted to the firm to hold the interview.

On an average, IIM-A's realisation through placement fee is over Rs 2 crore. Other IIMs realise between Rs 50-80 lakh from placement fee every year. With the 12.2 per cent tax being levied, these institutes will have to shell out anywhere between Rs 6.10 lakh-Rs 9.76 lakh.

The money generated through placements at these institutes is utilised towards meeting capital expenditure and other campus-related expenses.

But while the IIMs are all set loosen their purse strings, IITs have still not figured out why they have been included in the tax net. The management schools at IITs do not charge any placement fee from the companies.