GST on education

GST- Taxation on Education Services

What is Education?

“Education” is not defined in the CGST Act but as per Apex Court decision in “Loka Shikshana Trust v/s CIT”, education is process of training and developing knowledge, skill and character of students by normal schooling.

Applicability of GST on educational services?

Should GST levy on education- In simple one word answer is a big NO. When government talks about education for all than any tax on it seems unreasonable. Also when there is an obligation to provide free and compulsory elementary education to all education under right to education, charging tax is always sensitive.

Thus, to promote education, it would be beneficial if educational services are exempted from tax.

However, commercialisation of education is also a reality. The distinction between core and ancillary education is blurring and education is now an organised industry with huge revenues. The GST Act tries to maintain a fine balance whereby core educational services provided and received by educational institutions are exempt and other services are sought to be taxed at the standard rate of 18%.

Educational services in GST

Education Services are classified in heading 9992 (as per Notification No. 11/2017-Central Tax (Rate)) and are further sub-divided into six groups (as per the Annexure to the same notification) comprising of Pre-primary, primary, secondary, higher, specialised and other educational & support services as below in the table:

Heading and Group

Service Code

Service Description

Heading no. 9992

 

Education services

Group 99921

 

Pre-primary education services

 

999210

Pre-primary education services

Group 99922

 

Primary education services

 

999220

Primary education services

Group 99923

 

Secondary Education Services

 

999231

Secondary education services, general

 

999232

Secondary education services, technical and vocational

Group 99924

 

Higher education services

 

999241

Higher education services, general

 

999242

Higher education services, technical

 

999243

Higher education services, vocational

 

999249

Other higher education services

Group 99925

 

Specialised education services

 

999259

Specialised education services

Group 99929

 

Other education & training services and educational support services

 

999291

Cultural education services

 

999292

Sports and recreation education services

 

999293

Commercial training and coaching services

 

999294

Other education and training services n.e.c

 

999295

services involving conduct of examination for admission to educational institutions

 

999299

Other Educational support services

Rate of GST on Educational Services

Rate of GST The rates of GST on education services (as per Notification No. 11/2017-Central Tax (Rate), Notification No. 11/2017-Central Tax (Rate) and Notification No. 12/2017-Central Tax (Rate) all dated 28.06.2017 as amended) are as below:

Chapter/ Section/ Heading

9992

Description of Service

 

 

Education Services

Rate / Notification

 

 

18% ( 9% Central Tax

+ 9% State Tax)/ Serial No. 30 of Notification No. 11/2017-Central Tax (Rate) dated 28th June, 2017

 

9992

Services provided –

(a) by an educational

institution to its students,

faculty and staff;

(b) to an educational

institution, by way of, –

(i) transportation of

students, faculty and staff;

(ii) catering, including any

mid-day meals scheme

sponsored by the Central

Government, State

Government or Union

territory;

(iii) security or cleaning

or housekeeping services

performed in such

educational institution;

(iv) services relating to

admission to, or conduct

of examination by, such

institution; up to higher

secondary: Provided that

nothing contained in

entry (b) shall apply 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

NIL / Serial No. 66

of Notification No.

12/2017- Central Tax

(Rate) dated 28th

June, 2017

 

 

 

 

 

 

 

Chapter/ Section/ Heading

Description of Service

Rate / Notification

 

9992

Services provided  by the Indian Institutes of Management, as per the guidelines of the Central Government, to their students, by way of the following educational programmes, except Executive Development Programme: – (a) two year full time Post Graduate Programmes in Management for the

Post Graduate Diploma in Management, to which admissions are made on the basis of Common Admission Test (CAT) conducted by the Indian Institute of Management;

(b) fellow programme in Management; (c) five year integrated programme in Management.

NIL / Serial No. 67 of Notification No. 12/2017- Central Tax (Rate) dated 28th June, 2017

5%/ Serial No. 257

of Schedule I of

the Notification

No.1/2017-Central

Tax (Rate) dated

28th June, 2017

 

90 or any

chapter

Technical aids for

education, rehabilitation,

vocational training and

employment of the blind

such as Braille typewriters,

braille watches, teaching

and learning aids, games

and other instruments and

vocational aids specifically

adapted for use of the

blindBraille instruments,

paper etc.

 

 

 

9023

Instruments, apparatus

and models, designed for

demonstrational

purposes (for example, in

education or exhibitions),

unsuitable for other

uses

28 %/ Serial No. 191

of Schedule IV of

the Notification

No.1/2017-Central

Tax (Rate) dated

28th June, 2017

 

Meaning of Educational Institute in GST

Educational Institution means an institution providing services by way of:

  • Pre-school education and education up to higher secondary school or equivalent;
  • Education as a part of a curriculum for obtaining a qualification recognised by any law for the time being in force;
  • Education as a part of an approved vocational education

Within   the   term   “educational   institution”,   sub-clause   (ii)   covers institutions   providing   services   by   way   of  education   as   a   part   of curriculum for obtaining a qualification recognised by any law for the time being in force.  

This is an area where doubts have persisted as to what  would  be  the  meaning  of  “education  as  part  of  curriculum for obtaining  qualification  recognised  by  law”.   GST  on  services  being  a legacy  carried  forward  from  the  Service Tax  regime,  the  explanation given  in  the  Education  guide  of  2012  can  be  gainfully  referred  to understand the meaning of the term which reads as under;

What is the meaning of ‘education as a part of curriculum for obtaining a qualification recognized by law’?

It means that only such educational services are in the negative list as are related to delivery of education as ‘a part’ of the curriculum that has been prescribed for obtaining a qualification prescribed by law. It is important to understand that to be in the negative list the service should be delivered as part of curriculum. Conduct of degree courses by colleges, universities or institutions which lead grant of qualifications recognized by law would be covered. Training given by private coaching institutes would not be covered as such training does not lead to grant of a recognized qualification.

 

Are services provided by way of education as a part of a prescribed curriculum for obtaining a qualification recognized by a law of a foreign country covered in the negative list entry?

 No. To be covered in the negative list a course should be recognized by an Indian law.

 Vocational education course under GST

Within  the  term  “educational  institution”,  sub-clause  (iii)  covers institutions   providing   services   by   way   of  education   as   a   part of   approved   vocational   course,   and   institutions   providing   the above courses will come within the ambit of the term educational institution.  Notification  No.  12/2017-  Central  Tax  (Rate)  dated  28th June, 2017, defines approved vocational education course as under: An  “approved vocational education course” means, –

  • A course run by an industrial training institute or an industrial training center affiliated to the National Council for Vocational Training or State Council for Vocational Training offering courses in designated trades notified under the Apprentices Act, 1961 (52 of 1961); or
  • A Modular Employable Skill Course, approved by the National Council of Vocational Training, run by a person registered  with the Directorate General of Training, Ministry of Skill Development and

It is to be noted that only those institutions whose operations conform to the specifics given in the definition of the term “Educational Institution”, would be  treated  as  one  and  entitled to avail exemptions provided by the law. This would mean that private coaching centers or other unrecognized institutions, though self-styled as educational institutions, would not be treated as educational institutions under GST and thus cannot avail exemptions available to an educational institution.

Thus, educational institutions up to Higher Secondary School level do not suffer GST on output services and also on most of the important input services. Some of the input services  like  canteen,  repairs  and maintenance etc. provided by private players to educational institutions were subject to service tax in pre-GST era and the same tax treatment has been continued in GST regime.

Thus output services of lodging/boarding in hostels provided by such educational institutions which are providing pre-school education and education up to higher secondary school or equivalent or education leading to a qualification recognised by law, are fully exempt from GST. Annual subscription/fees charged as lodging/ boarding charges by such educational institutions from its students for hostel accommodation shall therefore, not attract GST.

Similarly, output services related to the specified courses provided by IIM’s would be exempt. Executive Development Programs run  by the IIM’s are specifically excluded, hence such courses would be subject to GST.

Input service for Educational Services

Regarding, input services, it may be noted that where output services are  exempted,  the  Educational  institutions  may  not  be  able  to  avail credit  of  tax  paid  on  the  input  side.  The  four  categories  of  services known as Auxiliary Education services, which educational institutions ordinarily carry out themselves but may obtain as outsourced services from any other person, have been exempted (as per Notification No. 12/2017-  Central  Tax  (Rate)).  Auxiliary  education  services  other  than what is specified above would not be entitled to any exemption.  The exemption also comes with a rider.  Such services are exempt only for educational  institutions  providing  services  by  way  of  education  upto higher secondary or equivalent. (from pre-school to HSC).  Thus if such auxiliary  education  services  are  provided  to educational  institutions providing degree or higher education, the same would not be exempt. For instance, the services of conducting admission tests for admission to colleges in case of educational institutions are providing qualification recognized by law for the time being in force shall not be liable to GST.

 

What will be the Place of Supply of Educational Services where the location of supplier of services and the location of the recipient of services is in India?

 As per section 12(6) of the IGST Act, 2017, the place of supply of services provided by way of admission to an educationalor any other place and services ancillary thereto, shall be the place where the event is actually heldor such other place is located.

As per section 12(7) of the IGST Act, 2017, the place of supply of services provided by way of, — (a) organisation of a cultural, artistic, sporting, scientific,   educational   or   entertainment   event   including   supply   of services  in  relation to  a  conference,  fair,  exhibition,  celebration  or similar  events;  or  (b)  services  ancillary  to  organisation  of  any  of the events or services referred to in clause (a), or assigning of sponsorship to such events: –

  • To a registered person, shall be the location of such person;
  • To a person other than a registered person, shall be the place where the event is actually held

and if the event is held outside India, the place of supply shall be the location of the recipient.

What will be the Place of supply of Educational Services where the location of the supplier of services or the location of the recipient of services is outside India?

 As  per  section  13(5)  of  the  IGST  Act,  2017,  the  place  of  supply  of services  supplied  by  way  of  admission  to,  or organisation  of  a cultural,  artistic,  sporting,  scientific,  educational  or  entertainment event, or a celebration, conference, fair, exhibition or similar events, and of services ancillary to such admission or organisation, shall be the place where the event is actually held.

 

You may also like...