This article discusses the applicability of GST to private coaching classes and other foods and accommodation service provided by such classes. Various AAR (Authority for Advance Rulings) have held that GST at 18% applies to such services.
Analysis of working in coaching classes and types
Under GST, an educational institution includes:
- Preschool education up to higher secondary education.
- Educational service is part of a curriculum or necessary to obtain a degree or certificate recognised by law time being in force.
- Educational service which is a part of approved vocational education courses.
The important aspect here is that services provided should be a part of a prescribed curriculum, and any law should recognise qualification for the time being in force.
Thus, any educational service provided which is a part of the curriculum or is compulsory for obtaining a qualification recognised by any law time being in force falls under the definition of an educational institution and exempted by GST.
But a private coaching institution which provides training to provide better preparation to the students for appearing in exams and not lead to a grant of any certificate/degree under any law is considered as educational institutions.
A coaching institution that does not have a specific curriculum and does not conduct any examination or provide a qualification does not fall under an educational institution’s definition and thus taxable at 18%.
Applicability of GST on accommodation and food services by educational institutes
Notification no. 12/2017 dated 28th June 2017, has provided a list of Nil rated services, including catering services provided by an educational institution to its students.
Thus, any supply of food and accommodation service by an educational institution is exempt from GST.
Applicability of GST on accommodation and food services by coaching classes
As per a recent Advance Ruling, GST applies to coaching classes, accommodation and food service. The Authority for Advance Rulings believed that the coaching class’s training is not compulsory under any law; it aims to provide better training to the students to appear in exams. Students can still prepare independently and appear for exams and qualify based on their level of performance. Such a coaching class does not fall under the definition of an educational institution.
The notification mentioned above exempts accommodation and food service provided by only an educational institution to its students. Since a private coaching class does not fall under the definition of an educational institution itself, the accommodation and food service provided by it is taxable under GST.
Value of supply and GST rate on accommodation and food service by coaching classes
Under GST, the value of supply is the transaction value, and it includes all taxes, cess, duty, fees and other incidental charges except GST. Thus, the value of supply will be the total fees charged from the students for food and accommodation service in the current case. The GST rate is 5% without ITC.
Based on the above interpretation of GST provisions and other notifications issued from time to time, one can conclude that private coaching classes do not qualify to be an educational institution. Thus, all services provided by a coaching class are taxable under GST.