Education is one of the major sector for any economy. The education of country’s youth will decide how the economy of that country will flourish. Education promotes understanding, vision, creativity and productivity of people which helps in advancement of a country. In India, education is provided both by public as well as private sectors.

Indian government’s foremost priority is to provide low cost education to one and all. That’s why education sector enjoy lots of tax exemption as they are not taxed or comes in negative list. The most important thing is that educational services and services related to the education or higher education provided to the students is covered under the Goods and Services Tax (GST) exempt list. The educational institutions that have been granted the exemption from GST are pre-schools and higher secondary educational institutes – both private and Government.

Exempted Educational Services under GST

The educational services exempted under GST are assessment and examination fees, curriculum related or course materials, excursion and field trips related to the course of study or part of curriculum requirement; except for food and accommodation supplied on those trips, and student administrative services such as registration, printing of academic transcripts, issuing or replacement of student cards, late fee payments, administration of the library etc.

The educational services provided by the Assessment agencies approved by the Sector Skill Council or the National Skill Development Corporation, National Skill Development Corporation set up by the Government of India, Sector Skill Councils approved by the National Skill Development Corporation, and Training partners approved by the National Skill Development Corporation or the Sector Skill Council are also exempted from GST.

Read More: GST Impact on GDP

Non-Exempted Educational Services under GST

The educational services that are not exempted from GST are after school activities offered directly by third parties, food and accommodation supplied for excursion, supplies provided by third parties like musical instrument, computers, sports equipment, and uniform, stationery, and other non-academic related supplies.

The educational services led by training and coaching foundations are also not exempted from GST. Let’s have a look at them.

1. Higher Education Institutions and Private Institutions

The exemption under GST has been granted for pre-schools till higher secondary education. Since universities and other advanced educational institutions have not been mentioned in the exception list, 18% GST is expected to be levied on this.

Higher education in the private segment will end up being more costly and in turn, competition for admissions in government schools/colleges/foundations will increase. There will be a 3 to 5% of the obligation jump on the administration costs that will over the long haul impact the common man. The middle class families who obtain education loans or put their life-long savings into educating their wards at reputed institutions will be facing the inconvenience.

2. Coaching Institutes

As clearing competitive exams and entrance exams seems impossible without taking professional coaching, coaching institutes form an integral part of education. GST has raised the tax rate to 18% from 14% for these coaching institutes. The parents whose children are about to start coaching for IITs and other competitive examinations will be facing the inconvenience.

3. Cost of Organizing Events

When foreign entities organize any educational or training events in India which are attended by professionals, individuals and overseas participants would be taxed under GST.

Apart from the exemption, the private education is likely to get expensive up to 2 or 3% after GST rolled out in India. Even if the lowest tax slab of 5% is applied, the chances are high to get it expensive according to the research and analysis of all the provisions of the bills introduced.

The GST slab rate of 5% is considered as lowest and thus, the government is requested to frame the laws in such a manner that the tax rate and input tax credit allowed in the education industry can share a load of taxation further improving the conditions.

If you would like to know more about GST benefits and impacts, please write to gstreadyindia@gmail.com