The Definition of Education as given by the Supreme Court in the Loka Shikshana Trust v/s CIT Case , is   that ‘education is process of training and developing knowledge, skill and character of students by normal schooling.’

Though not explicitly defined under GST Act, ‘Education’ has been classified in the heading of 9992 of Service Tax Accounting Code(SAC) and has further six sub-categorisations (as per Notification No. 11/2017-Central Tax (Rate)).

Heading & Group Service Code (Tariff) Service Description
Heading no. 9992 Education Services
Group 99921 999210 Pre-primary education services
Pre-primary education services
Group 99922 999220 Primary education services
Group 99923 Primary education services
Secondary Education Services
Heading & Group Service Code (Tariff) Service Description
Group 99924 999231 Secondary Education Services, General
999232 Secondary Education Services, , Technical and Vocational
999241 Higher Education Services, General
999242 Higher Education Services, Technical
999243 Higher Education Services, Vocational
Group 99925 999249 Other higher education services, Specialised education services
Group 99929 999259 Specialised education services,

Other education & training services and educational support services

999292 Sports and recreation education services
999293 Commercial training and coaching services
999294 Other education and training services
999295 services involving conduct of examination for admission to educational institutions
999299 Other Educational support services

Rate of Duty Applicable 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 Description of Service Rate /Notification
9992 Education Services 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) A 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
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
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 blind Braille instruments, paper etc. 5%/ Serial No. 257 of Schedule I of the Notification No. 1/2017-Central Tax (Rate) dated 28th June, 2017
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

Thus, services provided by an educational institution to students, faculty and staff are exempt. 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 course.

Here we can see that the Exemption has been provided for Education till  Higher Secondary and  for courses recognized by law. All University Higher Degrees are recognized by the University Grants Commission are therefore straight away exempted from the Levy of GST.But only the part of curriculum which is part of the course recognized by law would be exempt from GST.Also, we can see that exemption has also been provided for “Approved Vocational Education Course “ whose definition has been given in the Notification No. 12/2017 – Central Tax (Rate) dated 28th June, 2017, defines approved vocational education course as under:

  • A course run by an industrial training institute or an industrial training centre 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);
  • 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 Entrepreneurship.

One important factor to note would be that Input tax Credit (ITC) on input supplies used in providing these services would not be available as per Section 17(2) of the CGST Act 2017 read with Rule 42 of the CGST Rules 2017.

Exclusions and Inclusions :

Blanket Exemption is also provided to Any Educational Services Provided by Educational Insituties which are registrred as Charitable Trusts under Section 12AA of the Income Tax Act, 1961.

But the Services provided by Private coaching Inistitutes are not exempt in any way from GST.Also, for IIMs , as per Notification No. 12/2017- Central Tax (Rate) dated 28th June, 2017 only courses which are Exempt from GST are  the Two Year PGDM, Fellow Management and the Five Year Integrated Management Course but the Executive MBA Course is taxable.

Input Services :

GST is a Value Added Tax and an exemption at the final stage with no utilization of the ITC still does not remove the Hidden Indirect Tax Burden from the Customer. GST has also provided for Exemption from Taxation on the Input Supplies to Education. As per Notification No. 12/2017- Central Tax (Rate)), we have Four Auxiliary education services which even when outsourced to outside suppliers would not attract GST at Nil Rate. These are only applicable to Education till the Higher Secondary Level. These Four Auxiliary education services are:

  • 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 housekeeping services performed in such educational institution;
  • A services relating to admission to, or conduct of examination by, such institution;

Mixed and Composite Supplies:

Educational Institutes also provide certain other Services such as Boarding, Cafeteria Facilities, etc. What should be the tax Treatment when they are supplied with Education Services?

GST Law has a concept of Mixed and Composite Supplies for Such Supplies where several supplies are provided together in a single transaction. Composite Supplies are those where there is bundling of some supplies with a Principal Supply in the normal course of business. For Example – A Sim Card supplied with a Mobile Connection, Seat Covers sold with a Motor car, etc. In each of these examples we see that   Bundling is natural and not forced in the way the normal commerce of the particular article operates in the Market. Here the Tax Rate of the Principal Supply is applicable on the entire contract. Hence, we can assume that in cases of Boarding Schools the Rate of GST would also be Nil as the Principal Component has a Nil Rate of duty and hence the entire transaction is Nil Rated with no utilization of ITC .

But in Cases where the Bundling is not Natural,  it would be held to be a Mixed Supply as the provisions of Section 2(74)read with Section 8 of the CGST Act, 2017 and the Individual  Supply  having the Highest Rate of Duty would be attracted on the Entire Service. In the GST Era, Business Entities have to be very careful how they bundle and bill their Supplies. The Supply could be held as Mixed, Composite or Separate in different  cases.

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2 Comments

  1. Inderjit Singh Monga says:

    Very good illustration of GST application on education. But could you be please elaborate about GST obligations on Computer education and training providers.
    If Computer education centres come under the purview of GST then can they avail the ITC on their input supplies like purchase of computer hardwares, furniture and advertising bills etc.
    Thanks

  2. vipul gupta says:

    Dear Sir,
    Thanks for elaborating in deep all the provisions of GST applicable on education services.

    The government has not exempted gst on coaching services. This is causing great hardship to students. Moreso GST is being collected from students and students are not in position to know whether this GST being charged by coaching institutes are deposited with the GST department on time. It has risen the cost of coaching for students. Moreso rate of gst is on higher side.
    Once again Thank you for very lucidly explaining all the provisions of the GST on education services

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