26 Aug 2019Posted By: Mudit Handa


How does GST apply to Educational Institutions?

We all know that education is the basis of the economic development of a nation. It is the very essence of efficient Human Resource development. The quality of the human resource of a nation depends on how efficient is its education system.

It is very important to note that like all other services, education itself is an economic activity. Hence, educational institutions are not exempt from GST. There are clearly defined GST provisions for all educational institutions in India.


 

1. Which all Educational services are treated as supply in GST?

Yes, Educational services are considered as a taxable supply as per the CGST Act 2017.

As per section 7(1)(a) of CGST Act 2017, Supply is something that satisfies the following conditions:

  • It must be for a consideration
  • It must be made by an individual
  • It must be in the course of or in furtherance of business.

Now clearly, all Educational services that are provided for a consideration, i.e. fee, by individual and in the course of or in furtherance of business, are treated as supply in GST.


2. What is an Educational institution as per GST law?

As per the GST law, the educational institution means an institution that provides services by way of-

  • Imparting pre-School education and higher secondary or equivalent education.
  • Imparting education in order to obtain a qualification recognized by Indian law. 
  • Imparting education as a part of an approved vocational course.


3. Which all Educational services are exempt from GST? 

As per the GST law, following Educational services are exempt from GST-

  • Conducting a degree course by colleges and universities or institutions for providing qualifications recognized under law shall be exempt from GST. 
  • Education given at the charitable institutions shall be exempt from GST.
  • Conduct of the entrance exam by an Educational institution, against consideration by way of the entrance fee.
  • Admission fee
  • Conduct of the regular exams by an Educational institution.
  • Transportation or conveyance facility provided by an Educational institution to students, faculty, & staff.
  • Catering service, which includes mid-day meals sponsored by the Central or State Government.
  • Security services
  • Sanitation services

4. Whether there is GST on study material in case of distance learning?

In the case of distance learning, the supply of online study material such as periodicals or journals is exempt from GST, up to the level of higher secondary education.


5. Which all Educational services are not exempt from GST? 

As per the GST law, following Educational services are not exempt from GST-

  • Education above higher secondary level.
  • The courses undertaken by private coaching institutes or self-styled educational institutions shall not be exempt from GST.
  • Education as per the prescribed curriculum for getting qualification recognized by a foreign country shall not be exempt as the course is not recognized by Indian law.

6. What are the rates of GST on Educational services?

Following are the rates of GST on Educational services:-

  • Education service= 18%
  • Technical aids for education (teaching-aids)= 5%
  • Instruments, apparatus & models, for demonstration purpose= 28% 

7. Which Educational services attract GST on Reverse Charge?

There are few examples of Educational services that attract GST under the reverse charge mechanism (RCM). Educational institutions are liable to pay GST on RCM for these goods or services – 

  • Sponsorship revenues from non-corporate entities 
  • Security services from non-corporate entities
  • Sale of capital assets
  • Training, seminars & workshops, for people except for students, faculty, and staff.

8. When is GST Registration mandatory for an Educational institution?

An Educational institution is liable to get GST registration if-

  • The aggregate turnover exceeds the threshold limit of ₹ 40 Lakhs in a financial year.
  • Inter-State supply of goods or services
  • In all states where the person makes taxable supplies subject to the crossing of the threshold limit.

 

So, these are the key aspects of GST on Educational services.

 

In case you need any sort of assistance regarding GST registration, please feel free to contact our business advisor at 8881-069-069.

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