GST on Educational Institutes | Coaching Centers
With the introduction of the Goods and Services Tax (GST) in India, the taxation framework for various services has changed significantly. One of the key areas where there has been ambiguity is the GST applicability on Educational Institutes and Coaching Centers. While education is considered a noble sector and given exemptions under certain conditions, the coaching industry is not entirely exempt from GST. In this comprehensive guide by Team TAXAJ, we will explore the GST implications on educational institutions and coaching centers in India
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All you need to know about Taxation of Educational Institutes!
Pre-GST Laws For Educational Institutions
Pre-GST Laws For Educational Institutions
Services provided by an educational institution to its students or faculty or staff were exempt. (Mega Exemption -Notification Number ST-25/2012 dated 20th June 2012)
Later the exemption in relation to services provided to educational institutions was modified with effect from 1st April 2014 and scope of the exemption for services provided to the Educational Institutions (Institution providing pre-school education and education up to higher secondary school or equivalent) was restricted to some specified services namely-
- Transportation of students, faculty and staff
- Catering, including any mid-day meals scheme sponsored by the Government;
- Security services performed in such educational institution
- Cleaning services performed in such educational institution
- House-keeping services performed in such educational institution
- Services relating to admission to, or conduct of examination by, such institution
Any other service provided apart from those mentioned above to educational institutions (Institution providing pre-school education and education up to higher secondary school or equivalent) was taxable Also, any service provided to an institution other than Institution providing pre-school education and education up to higher secondary school or equivalent was taxable.
What is an Educational Institution under GST?
What is an Educational Institution under GST?
Under GST, “educational institution” is defined as 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 recognized by any law for the time being in force;
- Education as a part of an approved vocational education course;
GST Applicability on Educational Institutes
Educational Institutes, including schools, colleges, and universities, are primarily engaged in providing education that is recognized by law and grants recognized degrees or diplomas. As per the GST laws, certain educational services are exempt from GST under Notification No. 12/2017 – Central Tax (Rate). Let's look at the conditions for GST exemptions:
A. GST Exemptions for Educational Institutes
Educational institutions are exempt from GST if they provide:
- Pre-school Education and education up to higher secondary or equivalent.
- Education as part of a curriculum for obtaining a recognized qualification (e.g., degree courses).
- Education as part of an approved vocational education course.
These exemptions ensure that schools, colleges, and universities do not have to levy GST on the fees collected from students for recognized courses.
B. Non-Exempt Services by Educational Institutes
Not all services provided by educational institutions are exempt from GST. The following services are taxable:
- Transportation services provided to students, staff, or faculty.
- Hostel accommodation exceeding ₹1,000 per day.
- Sale of goods and services like books (non-academic), uniforms, or meal plans.
- Additional services such as event management, coaching, and extracurricular training.
Educational institutions must register for GST if their aggregate turnover exceeds the prescribed limit (₹20 lakh for most states).
GST on Coaching Centers and Private Tutors
Unlike educational institutes, coaching centers and private tutors are not eligible for GST exemptions, as these services are considered commercial in nature and not part of a recognized curriculum. Whether it's a competitive exam coaching center or a private tutorial service, GST is applicable at the standard rate.
A. GST Rate for Coaching Centers
The GST rate applicable to coaching centers is 18%, classified under SAC Code 999293 (Commercial Training and Coaching Services).
B. Input Tax Credit (ITC) for Coaching Centers
Coaching centers can claim Input Tax Credit (ITC) on the GST paid for goods and services used in the course of their business. This helps in reducing the overall tax burden, as they can offset the GST paid on purchases against the GST collected from students.
C. GST Registration for Coaching Centers
Coaching centers must obtain GST registration if their aggregate turnover exceeds ₹20 lakh (₹10 lakh for special category states). It is mandatory to register and file regular GST returns to remain compliant with the tax laws.
Are Educational Services considered as Supply and its Taxability
Are Educational Services considered as Supply and its Taxability
Taxable supply means a supply of goods or services or both which is leviable to tax under GST. The following services provided by an educational institution to its students, faculty and staff or to an educational institution are not required to be taxed under GST.
Transportation of students, faculty and staff; Catering, including any mid-day meals scheme sponsored by the Central Government, State Government or Union territory; Security or cleaning or house-keeping services performed in such educational institutions; Services relating to admission to, or conduct of examination by, such institutions up to higher secondary.
However, any service provided 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 is treated as a taxable service.
Services provided by the coaching centres, tuitions and private tutorials do not fall under the approved vocational education courses or approved by the government under law. Hence, they are taxable at 18% GST rate.
Exemptions Available to Educational Institutions
Exemptions Available to Educational Institutions
- Income from education is wholly exempt from GST if a charitable trust is running a school, college or education institution for abandoned, orphans, homeless children, physically or mentally abused persons, prisoners or persons over the age of 65 years or above residing in a rural area.
- Government or local authority or governmental authority carrying on the activity of education is exempted from GST as this is not included in the ambit of supply of services. For Example – Government schools / Municipal schools.
- Education provided by below are also Exempted Under GST:
- National skill development corporation set up by the Indian government
- National skill development corporation approved sector skill councils
- National skill development corporation approved assessment agencies
- The national skill development programs approved by NSDC Vocational skill development program approved under national skill certification and monetary reward scheme
- Any scheme implemented by NSDC with training partners
- Exemption has also been granted to the services provided by the IIM–
- 2 year full-time residential PG programs in Management for Post Graduate Diploma in Management, admission in which is granted via CAT
- Fellowship programs in Management
- 5 Year Integrated Programs in management studies (but excludes the Executive Development Program).
Should Educational Institutions be Registered under GST?
Should Educational Institutions be Registered under GST?
- Where the educational institution is providing only education as a service then such fees are chargeable at NIL rate and such educational institutions are not required to be registered.
- Where educational institutions are also providing other supplies or other services, i.e., providing books to students, providing shoes or uniforms etc to students then in such cases such institutions are liable to get themselves registered.
Applicability of GST on Higher Educational Institutions
Applicability of GST on Higher Educational Institutions
Services provided to higher educational institutions are taxable. While services provided by an educational institution are out of the GST ambit, the same is not the case with services provided to an educational institution. The GST exemption on procurements is available only to schools (from preschool up to higher secondary school or its equivalent).
Hence, the ‘input’ or supply of services such as transportation, catering, housekeeping, services relating to admission or conduct of examination to higher educational institutions will bear GST levy. This will have to be borne by the higher educational institution.
Applicability of GST on Training, Camps, Yoga Programs and Other Events
Applicability of GST on Training, Camps, Yoga Programs and Other Events
Training programs, camps, yoga programs and other events would be considered a commercial activity, liable for GST.
Whether books or stationery distributed to students covered under GST?
Whether books or stationery distributed to students covered under GST?
Supply of books is exempt under GST. However, uniform, stationery, and other non-academic related supplies are taxable under GST. Supplies provided by third parties like the musical instrument, computers, sports equipment and after-school activities offered directly by third parties are also taxable.
Detailed Analysis: Exempt vs. Taxable Educational Services
Service | Taxability | GST Rate |
---|---|---|
Pre-school education | Exempt | Nil |
Higher secondary education | Exempt | Nil |
Degree/diploma courses | Exempt | Nil |
Coaching classes for competitive exams | Taxable | 18% |
Private tuition services | Taxable | 18% |
Transportation (students/staff) | Taxable | 5% (if applicable) |
Boarding/hostel services | Taxable (if above limit) | 12% |
GST Compliance for Educational Institutes and Coaching Centers
Both educational institutions (providing taxable services) and coaching centers must adhere to the following compliance requirements:
- GST Registration: Mandatory for entities exceeding the turnover threshold.
- GST Invoicing: Proper tax invoices must be issued, specifying the applicable GST rate.
- GST Returns Filing: Monthly or quarterly returns must be filed as per the type of GST registration (Regular or Composition Scheme).
- Maintaining Records: Proper records of services rendered, expenses incurred, and GST paid must be maintained for audit purposes.
Chargeability of GST on Private Coaching centres and Distance Education
Chargeability of GST on Private Coaching centres and Distance Education
- Private institutions and coaching centres do not have any specific curriculum and do not conduct any examination or award any qualification. Hence taxable at the GST rate of 18%.
- Distance Education is taken up generally for higher education and hence taxable at the GST rate of 18%.
For example, M/s Shambhavi Tutorials provides class 11th and 12th tuitions for subjects such as Maths, Physics, Biology and Chemistry, including JEE exams. A student enrolls in their Class 12th programme plus JEE coaching for which the billing is as follows:
Tuition fee: Rs.48,450
Books: Rs.20,560
Maintenance fee: Rs.5,000
Total Value of Invoice (before tax): Rs.74,010
Taxable value = Rs.53,450 (Rs.48,450 + Rs.5,000)
CGST: Rs.4,811
SGST: Rs.4,811
Total GST charged: Rs.9,622
Total payable: Rs.83,632 (Rs.74,010 + Rs.9,622)
The private tutors and coaching centres must file GST returns like any other taxpayer in GSTR-1 and GSTR-3B either monthly or quarterly, depending upon turnover and whether or not they opt into the QRMP scheme. If they have opted into the composition scheme for service providers, then they must pay tax in CMP-08 and file GSTR-4 once in a year.
The importance of education in India can’t be undermined due to the majority of the population below 25 years of age. Due to the large population and poverty, Education should easily be available at less cost. Implementation of GST has led to rise in the cost of higher education and Distance Education. When schools were considered and exempted from GST, the government had to give the same consideration to HEIs as well, which would have avoided such a situation.
GST Impact on Parents and Students
The inclusion of GST on coaching services has resulted in an increase in the overall fee structure, directly affecting parents and students. For educational services like school fees, the impact is minimal due to exemptions, but the additional burden on coaching fees has raised concerns in the sector.
Tips for Parents and Students:
- Always check the GST component on invoices from coaching centers.
- Opt for institutes that offer recognized qualification courses to benefit from GST exemptions.
Expert Opinion by TAXAJ
At TAXAJ, we understand the complexities involved in GST compliance for educational services. Whether you run a school, college, or coaching center, our team of experts can help you navigate through the GST maze, ensuring your institution remains compliant while optimizing tax benefits.
Our GST Services Include:
- GST Registration and Filing
- Advisory on Input Tax Credit (ITC) Optimization
- GST Compliance Audits
- Customized Tax Planning for Educational Institutions
For more information or to schedule a consultation, contact Team TAXAJ today.
GST Rates and HSN Codes for Education-Related Products
Understanding the Goods and Services Tax (GST) rates, along with the corresponding Harmonized System of Nomenclature (HSN) and Services Accounting Codes (SAC), is essential for educational institutions and service providers in India. This guide provides a comprehensive overview of GST rates, HSN codes for education-related products, and SAC codes for education-related services.
1. GST Rates and HSN Codes for Education-Related Products
1. GST Rates and HSN Codes for Education-Related Products
Educational products encompass a variety of items, each classified under specific HSN codes with corresponding GST rates. Below is a detailed list:
Product Description | HSN Code | GST Rate |
---|---|---|
Printed books, including textbooks | 4901 | 0% |
Children's picture, drawing, or coloring books | 4903 | 0% |
Exercise books and notebooks | 4820 | 12% |
Educational charts, maps, and globes | 4905 | 12% |
Educational instruments and apparatus (e.g., microscopes) | 9023 | 18% |
Laboratory chemicals for educational purposes | 3822 | 18% |
Educational software (packaged) | 8523 | 18% |
Educational software (downloadable) | 9984 | 18% |
Stationery items (e.g., pens, pencils) | 9609 | 12% |
School bags | 4202 | 18% |
Educational toys and games | 9503 | 12% |
Note: The above GST rates are subject to change as per government notifications. It's advisable to consult the latest GST rate notifications or official GST portals for updates.
2. GST Rates and SAC Codes for Education-Related Services
Services in the education sector are categorized under specific SAC codes, each with designated GST rates. Below is a detailed breakdown:
Service Description | SAC Code | GST Rate |
---|---|---|
Pre-primary education services | 999210 | Exempt |
Primary education services | 999220 | Exempt |
Secondary education services (general) | 999231 | Exempt |
Secondary education services (technical and vocational) | 999232 | Exempt |
Higher education services (general) | 999241 | Exempt |
Higher education services (technical) | 999242 | Exempt |
Higher education services (vocational) | 999243 | Exempt |
Other higher education services | 999249 | Exempt |
Specialized education services | 999259 | Exempt |
Cultural education services | 999291 | 18% |
Sports and recreation education services | 999292 | 18% |
Commercial training and coaching services | 999293 | 18% |
Other education and training services n.e.c. | 999294 | 18% |
Services involving conduct of examination for admission | 999295 | Exempt |
Other educational support services | 999299 | 18% |
Note: The exemption applies to services provided by educational institutions to their students, faculty, and staff. Services such as transportation, catering, and housekeeping provided to educational institutions are exempt only when supplied to institutions providing education up to higher secondary level or equivalent.
3. Key Considerations
Exemptions: Core educational services provided by institutions offering recognized qualifications are generally exempt from GST. However, ancillary services may attract GST unless specifically exempted.
Input Tax Credit (ITC): Educational institutions providing exempt services are not eligible to claim ITC on inputs used for providing such services.
Compliance: It's crucial for educational service providers to determine the applicability of GST on their services and comply with invoicing and return filing requirements accordingly.
For the most accurate and up-to-date information, refer to the official GST portal or consult with a tax professional.