An educational institution under GST is defined as an institution that provides services by way of –
- Education at the pre-school level and education upto higher secondary school or equivalent.
- Education as a part of the curriculum for obtaining a qualification
- Education that is a part of an approved vocational education course.
What is an Educational Institution Under GST?
Under GST, “educational institution” is defined as an institution providing services by way of:
- 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;
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.
Taxability of Educational Services
Taxable supply means the supply of goods or services that is subject to tax under GST. The following services provided by an educational institution to its faculty, staff, and students are not taxed under GST –
- Transportation of students, faculty, and staff.
- Catering and mid-day meals scheme sponsored by the Central Government, State government or Union Territory. It also includes security, housekeeping, and cleaning services provided by the educational institutions.
- Services relating to admission to conduct of examination by such institutions upto higher secondary.
While the services provided by an educational institution are not liable to GST, services provided to an educational institution are subject to GST.
Services provided by private tutorials, tuitions, and coaching centers are not covered under approved vocational education services and, thus, are taxable at 18% GST.
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).
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 |
FAQs
Q1. Is GST applicable on examination fees?
Examination fees charged by educational institutions are exempt from GST if they are part of the institution’s core educational services.
Q2. Are books and stationery items sold by schools or colleges subject to GST?
Books are generally exempt from GST, while stationery items are taxed at 5% to 12% GST, depending on the specific item.
Q3. Is GST applicable to transportation services provided by educational institutions?
Transportation services provided by educational institutions are subject to 5% GST, and input tax credit (ITC) is available for these services
Q4. Should educational institutions be registered under GST?
- Where the educational institution is providing only education as a service then such fees are chargeable at NIL rate and such educational institutions are not required to be registered.
- Where educational institutions are also providing other supplies or other services, i.e., providing books to students, providing shoes or uniforms etc to students then in such cases such institutions are liable to get themselves registered.
Q5. Are universities exempt from GST?
Universities are exempt from GST on educational services if they are run by charitable trusts, government, or local authorities. However, private universities may be liable for GST depending on their revenue and the services they provide.
Q6. What is the GST rate for online education?
Online education services are generally taxed at 18% GST.
- Government-Run Platforms: Some courses may be exempt or taxed at a concessional rate.
- Private Online Education Providers: Typically subject to 18% GST on course fees.
Q7. Whether books or stationery distributed to students covered under GST?
Supply of books is exempt under GST. However, uniform, stationery, and other non-academic related supplies are taxable under GST. Supplies provided by third parties like the musical instrument, computers, sports equipment and after-school activities offered directly by third parties are also taxable.
Q8. Are books and stationery items sold by schools or colleges subject to GST?
Books are generally exempt from GST, while stationery items are taxed at 5% to 12% GST, depending on the specific item.
