Goods and Services Tax (GST), biggest tax reform since Independence has been finally implemented across the country from 1st July. On one hand, Government has exempted education sector till higher secondary in the new regime while on another hand coaching classes, certification courses, training programs have been placed in the slab rate of 18 percent.
What were pre-GST laws laid down for educational institutions
Services provided by an educational institution to its students or faculty or staff were exempt. (Mega Service Tax Exemption -Notification Number ST-25/2012 dated 20th June 2012)
Later, the exemption in relation to services provided to educational institutions was modified with effect from 1st April 2014 and scope of the exemption got restricted for some specified services provided to Educational Institutions (Institution providing pre-school education and education up to higher secondary school or equivalent) such as-
- Transportation of students, faculty and staff
- Catering, including any mid-day meals scheme sponsored by the Government;
- Security services performed in such educational institution
- Cleaning services performed in such educational institution
- House-keeping services performed in such educational institution
- Services relating to admission to, or conduct of examination by, such institution
Any other service provided apart from those mentioned above to educational institutions was taxable. Also, any service provided to an institution other than Institution providing pre-school education and education up to higher secondary school or equivalent was taxable.
What is an educational institution under GST?
- Pre-school education and education up to higher secondary school or equivalent;
- Education as a part of a curriculum for obtaining a qualification recognised by any law for the time being in force;
- Education as a part of an approved vocational education course
Are educational services considered as supply and its taxability
Taxable supply means a supply of goods or services or both which is leviable to tax under GST. The following services provided by an educational institution to its students, faculty and staff or to an educational institution are not required to be taxed under GST.
- Transportation of students, faculty and staff
- Catering, including any mid-day meals scheme sponsored by the Central Government, State Government or Union territory Security or cleaning or house-keeping services performed in such educational institutions
- Services relating to admission to, or conduct of examination by, such institutions up to higher secondary
While services provided by an educational institution are out of the GST ambit, the same is not the case with services provided to an educational institution. The GST exemption on procurements is available only to schools (from preschool up to higher secondary school or its equivalent).
However, any service provided to an institution other than an educational institution (as defined above) is treated as a taxable service.
Services provided by the coaching centres, tuitions and private tutorials do not fall under the approved vocational education courses or approved by the government under law. Hence, they are taxable at 18% GST rate.
Classification and GST Rates on education services
Service Type | Description | GST Rates | GST Exemption |
School education | Pre-school, primary, secondary | Exempt | Yes |
Higher education services | Colleges, university | 18% | No |
Professional coaching | Skill development courses | 18% | No |
E-learning | Exam Preparations, private tuitions | 18% | No |
Vocational training | Online courses, digital education | 18% | No |
GST exemptions available to educational institutions
- Income from education is wholly exempt from GST if a charitable trust is running a school, college or education institution for abandoned, orphans, homeless children, physically or mentally abused persons, prisoners or persons over the age of 65 years or above residing in a rural area.
- Government or local authority or governmental authority carrying on the activity of education is exempted from GST as this is not included in the ambit of supply of services. For Example – Government schools / Municipal schools.
- Education provided by below are also Exempted Under GST:
- National skill development corporation set up by the Indian government
- National skill development corporation approved sector skill councils
- National skill development corporation approved assessment agencies
- The national skill development programs approved by NSDC Vocational skill development program approved under national skill certification and monetary reward scheme
- Any scheme implemented by NSDC with training partners
- Exemption has also been granted to the services provided by the IIM–
- 2 year full-time residential PG programs in Management for Post Graduate Diploma in Management, admission in which is granted via CAT
- Fellowship programs in Management
- 5 Year Integrated Programs in management studies (but excludes the Executive Development Program).
FAQs
Q1. Is GST charged on education loans?
Education loans, being actionable claims, are neither treated as supplies of goods nor services as per Schedule III of the CGST Act and hence, no GST is leviable. Still, services related to processing such loans will attract GST.
Q2. GST impact on the education sector
The importance of education in India can’t be undermined due to the majority of the population below 25 years of age. Due to the large population and poverty, Education should easily be available at less cost. Implementation of GST has led to rise in the cost of higher education and Distance Education. When schools were considered and exempted from GST, the government had to give the same consideration to HEIs as well, which would have avoided such a situation.
Q3. How much GST is on an educational grant?
Educational grants provided by the Government or charitable entities are exempt from GST.
Q4. Is GST charged on education loans?
Education loans, being actionable claims, are neither treated as supplies of goods nor services as per Schedule III of the CGST Act and hence, no GST is leviable. Still, services related to processing such loans will attract GST.
