The unsurpassed sector – Education is of pre-eminent importance to any economy. The country’s future depends on the wisdom & education of today’s youth. Education fosters vision, understanding, creativity & productivity. In India, education is provided by private as well as public sectors.
In India, education has always been a sector of utmost importance, the importance of which is beyond the political changes. The right for children to Free & Compulsory Education Act 2009 has not only made education compulsory but also held the government responsible to provide education & its services at economical rates. The council has kept education free from its impositions.
Post the implementation of GST, the Indian education sector yet again continues to retain the blessing of tax exemption. All the educational related services have now been covered under the GST exempt list. The exemptions cover the services related to education, provided by any educational institution to its students, faculty and staff like transportation, catering, mid-day meals, admissions, examinations, housekeeping etc. The educational institutions that have been granted the exemption from GST are pre-schools and higher secondary educational institutes – both private & Government.
Let’s take a quick look at the impact of GST on the education sector:
Services provided by the educational institutions, have been kept at bay from the taxable categories under GST. Education institutions by definition mean any of the following:
- Education which is part of approved vocational courses
- Pre-school up to higher secondary or equivalent
- Education which part of a curriculum, aimed at the obtaining of a qualification, as recognized by law
Following are the other education-related services that are covered under the exemptions:
- Assessment/examination fees
- Curriculum/course materials
- Excursions/field trips related to the course/curriculum (Food provided etc. are not exempted)
- Student administrative services, such as registration, academic transcripts, issuing/replacing student cards, late fee payments etc.
- Services provided to students/faculty/staff
- Transportation of students/faculty/staff
- Catering, including any mid-day meals scheme sponsored by the Government
- Security/cleaning/house-keeping services
- Services related to admission/conduct of examination (up to higher secondary)
Following are a few important services provided by IIMs that have been exempted from GST:
- Fellowship programs in Management
- 2 year full-time residential PG programs in Management for Post Graduate Diploma in Management (admissions via CAT)
- 5 years integrated programs in Management Studies (excludes the Executive Development Program)
Following are a few important education services provided by institutions/ corporations below are exempted from GST:
- National skill development corporation approved sector skill councils
- National skill development corporation set up by the Indian government
- National skill development corporation approved assessment agencies
- National skill development programs approved by NSDC
- A vocational skill development program approved under national skill certification & monetary reward scheme
- Any scheme implemented by NSDC with training partners
Following services/supplies are not exempted from GST:
- Food/accommodation as provided in excursions
- After school activities that are offered by third parties directly
- Education supplies provided by third parties e.g. sports equipment, computer, musical instruments etc.
- Uniform, stationary etc. (non-educational supplies)
Education provided by:
Education provided by pre-school up to higher secondary, by private institutions is exempted from GST. Though education via private institutions may get more expensive by 3%-5%, due to other GST taxes levied (operational costs, supplies etc.). Other institutions that are not exempted from the GST list will get taxed up to 18%.
Coaching institutes are not exempted from GST and will attract a tax of 18% (earlier 14%). This makes it clearly evident that the aspirants of competitive exams will have to shell out extra money.
Cost of Organizing Events
Educational/training events organized in India by foreign entities that are attended by professionals, individuals or overseas participants as well would be taxed under GST.
While the basic educational requirements & services remain tax-free under the new regime, the private institutions and supplies are going to see a slightly escalated tax rate. This would also impact on the entrance examination fees for various competitive exams.