Education or Business? – GST’s Verdict on Online Learning

1. Introduction

In the era of digital transformation, education has seamlessly shifted from traditional classrooms to online platforms—webinars, e-learning modules, and virtual skill development programs are now the norm. However, this evolution has brought with it a critical policy question: Do these digital learning services qualify as “education” or are they merely “commercial training” subject to GST?

As individual trainers, EdTech companies, and upskilling platforms rapidly grow, the distinction becomes crucial for both taxation and compliance. The line between public-good education and profit-driven training is blurring, and the GST law must step in to draw it—with clarity, precision, and fairness.

2. Supply of Online Training: A Taxable Activity under GST Law

Under Section 7(1)(a) of the Central Goods and Services Tax Act, 2017 (“CGST Act”), “supply” includes all forms of supply of goods or services or both such as sale, transfer, barter, exchange, license, rental, lease or disposal made or agreed to be made for a consideration in the course or furtherance of business. Online courses, webinars, and skill training programs—when offered for a fee—are therefore squarely covered as taxable “supply of services”.

Section 2(102) of the CGST Act defines “services” to mean anything other than goods, money, and securities. Accordingly, online education modules, coaching classes, and instructor-led digital sessions fall within the ambit of “services”. If provided for consideration, these services attract GST unless specifically exempted.

3. Educational Institutions and Exemption: Statutory Interpretation

GST exemptions for educational services are available under Entry No. 66 of Notification No. 12/2017-Central Tax (Rate), dated 28th June 2017. The relevant exemption covers:

However, the scope of the term “educational institution” is narrowly defined under Clause 2(y) of the same notification. It restricts coverage to:

• Institutions providing pre-school to higher secondary education;
• Institutions providing education as part of a curriculum for obtaining a qualification recognized by law;
• Institutions offering approved vocational education courses.

Any training, online or offline, which does not meet the above criteria does not qualify as service provided by an “educational institution” and hence does not attract exemption. Therefore, commercial coaching, corporate training, digital upskilling programs, or webinars offering participation certificates do not qualify for GST exemption.

4. GST Rates on Education and Training Services (SAC-Wise Classification)

5. GST on Sale of Books by Coaching Institutes

Under GST law, the taxability of books supplied by coaching institutes depends on the nature of the supply. Printed books falling under HSN 4901 are exempt from GST when sold independently.

However, if books are provided as part of a coaching package, the entire supply is considered a composite supply under Section 2(30) of the CGST Act, 2017, with coaching as the principal supply (SAC 999293, taxable at 18%). In such cases, GST at 18% applies on the full consideration, including books. Further, if the material is supplied in digital form (PDFs, videos, e-books), it is treated as online content service and attracts 18% GST. Hence, only standalone sale of printed books qualifies for GST exemption; otherwise, the full package is taxed.

6. Place of Supply for Educational & Coaching Services

The place of supply for educational services under GST is governed by Section 12 of the IGST Act, 2017. As per Section 12(6), when services are provided by way of admission to an educational or coaching event (such as a seminar or training), the place of supply is the location where the event is actually held. For other educational services, including coaching or training provided to a registered person, Section 12(7)(a) states that the place of supply is the location of the recipient. If the recipient is unregistered, the place of supply is the location where the services are actually performed. In case of online coaching or webinars (OIDAR services), where the supplier is located outside India and the recipient is in India, the place of supply is India, making it a taxable import of service.

7. Value of Supply for Educational and Coaching Services

The value of supply under GST is determined in accordance with Section 15 of the CGST Act, 2017, which states that the value shall be the transaction value, i.e., the price actually paid or payable for the said supply when the supplier and recipient are not related and the price is the sole consideration. In the context of coaching and training services, this includes tuition fees, registration charges, examination fees, study material charges, and any other incidental expenses collected as part of the service package.

When coaching institutes provide study materials, printed books, or access to recorded lectures, and such items are bundled naturally with the service, it is treated as a composite supply under Section 2(30), where the principal supply is coaching (SAC 999293). In such cases, the entire amount is taxed at 18%, even if books are otherwise exempt when sold separately. Any discounts must be shown on the invoice to be excluded from the taxable value. Additionally, if coaching is offered via online mode, charges for platform access, cloud storage, or app usage are also included in the value of supply and taxed accordingly.

8. Composite and Mixed Supplies in the Context of Coaching and Educational Services

Under the GST framework, understanding composite supply and mixed supply is crucial, especially for coaching centers, EdTech platforms, and skill-training academies. These terms are defined under Section 2(30) and Section 2(74) of the CGST Act, 2017, and they determine the applicable tax rate based on the nature of the bundled offerings.

(1) Composite Supply – Section 2(30) of CGST Act

A composite supply refers to a naturally bundled supply of two or more taxable supplies, supplied in conjunction with each other in the ordinary course of business, where one is the principal supply.
Example in coaching: When a coaching institute provides tuition, printed notes, test series, and online access together for one lump sum fee, it is considered a composite supply. Here, the principal supply is coaching service (SAC 999293 – 18%), and hence, the entire package is taxable at 18%, even if books alone would be exempt if sold separately.

(2) Mixed Supply – Section 2(74) of CGST Act

A mixed supply refers to a combination of two or more individual supplies of goods or services made together for a single price, which are not naturally bundled and can be supplied separately. In such cases, the highest rate of tax applicable to any one item in the bundle is applied to the entire supply.
Example in coaching: If a coaching institute offers a combo pack of a coaching class (18%), a calculator (28%), and a school bag (18%) for a single price, and these are not naturally bundled in the ordinary course of business, it becomes a mixed supply, and 28% GST will apply on the total value.

9. Export of Online Training Services: Zero-Rated or Taxable?

Where the recipient of online education is located outside India, the supply may qualify as an “export of service” under Section 2(6) of the Integrated Goods and Services Tax Act, 2017 (“IGST Act”), provided the consideration is received in convertible foreign exchange and other conditions are satisfied. Such exports are treated as zero-rated under Section 16 of the IGST Act and are not subject to GST. The supplier can either export under LUT (Letter of Undertaking) without payment of tax or claim refund of GST paid.

However, careful attention must be given to the place of supply provisions under Section 13 of the IGST Act, especially for determining whether the recipient qualifies as being “outside India” for tax purposes.

10. GST Registration and Compliance Requirements for Educators

Online trainers, course creators, or platforms are required to obtain GST registration if their aggregate turnover exceeds the threshold limit of ₹20 lakhs (₹10 lakhs for special category States) under Section 22 of the CGST Act. Furthermore, under Section 24, compulsory registration is mandated for those supplying inter-State services or operating through e-commerce platforms, irrespective of turnover.

Once registered, the supplier must comply with invoicing provisions under Section 31, maintain books of accounts, and file periodic GST returns such as GSTR-1 and GSTR-3B. Where applicable, annual return (GSTR-9) and audit under Section 35(5) may also be required.

11. Input Tax Credit (ITC) Eligibility for Online Trainers

Suppliers of taxable online education services are eligible to avail Input Tax Credit (ITC) on goods and services used in the course or furtherance of business, in accordance with Section 16 of the CGST Act. This includes ITC on software, internet services, professional fees, advertising, and office rentals, subject to the fulfillment of prescribed conditions.

However, if part of the service is exempt (e.g., some courses are exempt while others are taxable), ITC reversal under Rule 42 and 43 of the CGST Rules, 2017 may become applicable.

12. Core Distinction: Recognized Curriculum vs. Commercial Offering

The critical takeaway is that not all educational content is education under GST. For a service to be exempt, it must be:

1.Provided by an institution recognized by a competent authority;

2. Part of a curriculum that leads to a qualification recognized under any law in force;

3. Or, an approved vocational course as notified by the Government.

Everything else—including upskilling platforms, career-based webinars, corporate training sessions, and freelance online courses—shall be treated as commercial training and taxed at 18% GST.

Conclusion: Legal Substance over Educational Form

In the realm of GST, substance takes precedence over form. Merely labeling a webinar as “educational” or a training module as “skill-based” does not qualify the same for exemption under Notification No. 12/2017 unless it satisfies the statutory definitions and qualifications. Providers of online courses and webinars must carefully evaluate their legal position, register and comply with GST law, and apply correct tax treatment to avoid future disputes or liabilities.

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Disclaimer:  The information provided in this article is intended for general understanding and educational purposes only. It reflects the provisions of the Goods and Services Tax (GST) law as interpreted by the author based on notifications, circulars, and judicial pronouncements available as on the date of writing. Readers are advised to consult a qualified tax professional or refer to the official GST law for specific guidance before making any business decisions. The author and publisher disclaim any liability for actions taken based on the contents of this article.