GST on Educational Institutes, Coaching Centers
Educational institutions provide noble service of educating children for a better future. GST on certain services provided by the educational institutions is exempt or not taxable. The article provides detailed information on this aspect.
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Name, Contact Number and Email Id of Stakeholder.
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All you need to know about Taxation of Educational Institutes!
What were pre-GST laws laid down for Educational Institutions
What were pre-GST laws laid down 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;
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 Institutions
Exemptions available to 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 programs, camps, yoga programs and other events
Applicability of GST on Training programs, 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.
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.
