For a country to prosper economically, education is seen as a prerequisite. Any country’s ability to produce a skilled workforce is directly tied to the standard of its educational system. Therefore, Taxing the educational industry has always been controversial since learning is seen as a civic duty rather than a commercial enterprise. Inspiringly, schools are doing great work by preparing the next generation for a brighter future via education. As a result, certain services offered by educational institutions are free from GST and certain activities are liable to GST. This article discusses all the important information of the GST tax on the Education Sector.
Impacts of GST Tax on Education Sector in India
The GST Act strikes a delicate balance between taxing other services at the regular rate of 18% and exempting fundamental educational services delivered and received by educational institutions.
Auxiliary services obtained by such educational institutions for the purpose of education up to and including the Higher Secondary level are likewise GST-exempt.
Other educational services not included in the exemption are subject to a standard rate of 18%, with full admissibility of ITC(Input Tax Credit) for such taxable services in circumstances where the output service is not exempt.
However, Goods and Services Tax (GST) is not applicable to charity operations performed by an organization registered under section 12AA of the Income-tax Act, 1961 (43 of 1961).
GST on Hostel Services is also an important concept under Impact of GST tax on education sector.
Classification of Educational Services under the GST Regime
Notification No.11/2017 of the Central Tax Rate places educational services under Heading 9992. It’s broken down even further into six categories, which are:
- Pre-primary education services (Group 99921)
- Primary education services (Group 99922)
- Secondary Education Services (Group 99923)
- Higher education services (Group 99924)
- Specialized education services (Group 99925)
- Other education & training services and educational support services (Group 99929).
How do we define Educational Institutes under GST?
For the purposes of Goods and Services Tax, a “educational institution” is defined as an organization that offers education through:
- schooling from infancy through high school or its equivalent;
- education as part of a programme leading to a credential recognised by any legislation now in effect;
- Schooling as part of a recognised programme of vocational education.
Various Taxable and Exempt Education Services as per GST Regime
Services supplied by an educational institution to its students, teachers, or staff, or to other educational institutionare exempt from GST taxation. This may include:
- Provision of transportation for students, teachers, and staff;
- Provision of food, including participation in any subsidized midday meal programme run by the Central Government, a state Government, or a Union territory;
- Services related to maintaining order and cleanliness in schools;
- Assistance in applying to or taking exams administered by post-secondary educational facilities.
Any service rendered to a school or university other than one offering pre-school or elementary schooling through high school or its equivalent is considered taxable.
Services offered by coaching centers, tuition services, and private tutors that are not recognised by the government as legitimate forms of vocational education. Accordingly, they attract GST tax at the rate of 18%.
Who will pay GST?
Forward Charge covers Education Services. As a result, the service provider is responsible for paying GST.
Complete List of Exemptions offered to Educational Institutions
- If a nonprofit organization is operating a school, college, or education institution for underprivileged children, adults, or seniors (those 65 and above who live in rural areas), those students’ tuition and fees are free from GST.
- The Goods and Services Tax (GST) does not apply to the operation of any government, local government, or governmental entity engaged in the provision of education. As an illustration, consider public or municipal schools.
- The following educational services are also excluded from the GST Legislation:
- A government-established Indian national talent development corporation
- Industry-specific skill councils recognised by the National Skill Development Corporation
- Companies that have been deemed credible by the National Skill Development Corporation
- The NSDC-approved nationwide initiatives for skill development Program for the enhancement of employable skills recognised by the National Skill Certification and Payout System
- Any plan that NSDC and its training collaborators put into action
- The IIM’s two-year, full-time, residential PG programs in management for Post Graduate Diploma in Management are exempt as well, as are the IIM’s five-year, integrated PG Fellowship and Management programs, which admit students through the Common Admissions Test (but excludes the Executive Development Program).
GST Registration for Educational Institute in India
- When an educational institution provides just education as a service, such fees are charged at a rate of Nil and such institutions are not obliged to register.
- If a school provides more than just education it also provides students with textbooks, with shoes, with uniforms, etc.—it must get GST Registration as a vendor with the appropriate authorities.
Is GST Applicable to Activities Such as Training Camps, Yoga Retreats, and More?
Events like training camps, yoga retreats, and similar activities will be regarded as commercial activities and are subject to GST.
Are free school supplies like books and stationary subject to GST?
In regards to Goods and Services Tax, the supply of academic books is exempt. The GST does not apply to textbooks or other academic supplies, but it does apply to uniforms, stationary, and other items not directly linked to education. Science Instruments, computers, sports equipment, and extracurricular activities provided by outside sources are all also subject to GST.
In India, all children
have the inherent right to an education. The GST Law takes into account this fact by exempting from GST the educational institutions that give education through the equivalent of high school. However, like any other taxpayer, private tutors and coaching centres are required to do GST Return Filing. Other services apart from education are also liable to GST and most of them are taxed at the rate of 18%. You can learn more about GST Tax on Education Sector on GST on Education Services, How does GST apply to Educational Institutions? or call our GST Experts at 8881-069-069.
Download E-Startup Mobile App and Never miss the latest updates narrating to your business.