Capitation Fee - Capitation Fees in India

Capitation Fees in India

In the context of Indian law, a capitation fee refers to the collection of payment by educational bodies not advertised in the prospectus of the institution, usually in exchange for admission to the institution. The Prohibition of Unfair Practices in Technical Educational Institutions, Medical Institutions and Universities Bill, 2010 defines Capitation Fee as any amount (by whatever name called)—

• Demanded or charged or collected, directly or indirectly, for, or, on

behalf of any institution, or paid by any person in consideration for admitting any person as student in such institution; and which is in excess of the fee payable towards tuition fee and other fees and other charges declared by any institution in its prospectus for admitting any person as student in such institution; or

• Paid or demanded or charged or collected, by way of donation, for, or,

on behalf of any institution, or paid by any person in consideration for admitting any person as a student in such institution.

A submission by counsel, F.S. Nariman, in the P.A. Inamdar case (August 2005) defines capitation fee as "something taken over and above what the institution needs by way of revenue and capital expenditure plus a reasonable surplus."). It also goes by the name donations that are not of the voluntary type. This practice is widely prevalent in private colleges and universities in India, especially those that grant baccalaureate degrees in Engineering, IT and the sciences, for which the demand for admissions exceeds the supply.

In one aspect or point of view, the capitation fee comes as a surprise to the student at a time when the student may have forsaken admission deadlines at other institutions. Choosing not to pay may even lead to a form of extortion by withholding the degree. Parents often cough up money so that there is no ill bearing that affects their wards scores or standing. The fee might not be uniformly applied. The donation money is often not accounted, its usage and allocation are mismanaged and not reported to Income Tax. In such cases of malpractice, students over pay for sub-standard education.

Capitation fees are generally seen as a main revenue generator in the private private institutions may charge, contending that admissions that cater to affordable sections of society somehow affects the overall number of students educated. The government also controls the seat allocation, number and ratio of management, payment and free seats. This limits the institutions' ability to raise money through tuition, leaving institutions in need for money. Collecting donations becomes a side effect of the government laws that disallow institutions from setting their fees. Some parents do genuinely donate to improve the infrastructure of their wards' college.