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Educational institutions provide noble service of educating children for a better future. GST on certain services provided by the educational institutions is exempt or not taxable. The article provides detailed information on this aspect.
Services provided by an educational institution to its students or faculty or staff were exempt. (Mega 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 for services provided to the Educational Institutions (Institution providing pre-school education and education up to higher secondary school or equivalent) was restricted to some specified services namely-
Any other service provided apart from those mentioned above to educational institutions (Institution providing pre-school education and education up to higher secondary school or equivalent) 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.
Under GST, “educational institution” is defined as an institution providing services by way of:
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.
However, any service provided to an educational institution other than an institution providing services by way of pre-school education and education up to higher secondary school or equivalent 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.
Services provided to higher educational institutions are taxable. 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).
Hence, the ‘input’ or supply of services such as transportation, catering, housekeeping, services relating to admission or conduct of examination to higher educational institutions will bear GST levy. This will have to be borne by the higher educational institution.
Training programs, camps, yoga programs and other events would be considered a commercial activity, liable for 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.
To know about the taxability of food and accommodation service by educational institutions and coaching centres, read our article on GST on food and accommodation service.
For example, M/s Shambhavi Tutorials provides class 11th and 12th tuitions for subjects such as Maths, Physics, Biology and Chemistry, including JEE exams. A student enrolls in their Class 12th programme plus JEE coaching for which the billing is as follows:
Tuition fee: Rs.48,450
Maintenance fee: Rs.5,000
Total Value of Invoice (before tax): Rs.74,010
Taxable value = Rs.53,450 (Rs.48,450 + Rs.5,000)
Total GST charged: Rs.9,622
Total payable: Rs.83,632 (Rs.74,010 + Rs.9,622)
The private tutors and coaching centres must file GST returns like any other taxpayer in GSTR-1 and GSTR-3B either monthly or quarterly, depending upon turnover and whether or not they opt into the QRMP scheme. If they have opted into the composition scheme for service providers, then they must pay tax in CMP-08 and file GSTR-4 once in a year.
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.