Examination Fee, Whether Incidental or Main Activity

Income Tax Act
1

Hello everyone,

Would charging examination fee (for conducting exam at completion of a course) by a charitable educational NGO be considered an incidental activity or would it fall under the meaning of main activity (educaiton). The context is that we cannot charge fee for main activity but we can charge for incidental activities.

Thanks & Regards

Manoj Sharma

2

Thanks Manoj. Let us see the definition of Regular income in S. 355 of ITA 2025 as per below

S335-Regular income includes-(a) receipts from charitable or religious activity for which registered (b) capital/revenue receipts from property/investment held (c) voluntary contribution (d) gains from commercial activity received in tax year

If it is an educational institution registered with the purpose of education as per 2(15) or 2(23) going forward, then exam fee would be covered within (a) as receipts for the activity for which registered and not as incidental commercial receipts. Exam fee is integral to education and not incidental.

CS Sharad Bhargava

3

Thanks for Reply!

I beg to differ. If a teacher doesn’t take exam/test of his students, it won’t affect the education provided by him. A student who has attended full course but did not give exam, can not be said to have received less education than his classmates. It is an assessment of what a student has learnt. Seems not to be an integral part of education.