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:
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:
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:
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.