BRIEF NOTE ON EXEMPTION UNDER GST ON EDUCATION SERVICES: –
Education services are exempt under GST in following two scenarios:
A. Education Services Provided by Educational Institutions
B. Services by an entity registered under Section 12A of the Income tax Act, 1961
A. Education Services Provided by Educational Institution
Services provided by Educational Institution are exempted under entry no. 66 of Notification No. 12/2017 Central Tax (Rate) dated 28/06/2017 (as amended). As per said entry Services provided: –
(a) by an educational institution to its student, faculty, and staff
(aa) by an educational institution by way of conduct of entrance examination against consideration in form of entrance fee
(b) to an educational institution by way of –
(i) transportation of student and staff
(ii) catering, including any mid 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) services relating to admission to or conduct of examination by such institution
(v) supply of online educational journals or periodicals
Provided that nothing contained in sub item (i), (ii) and (iii) of item (b) shall apply to an education institution other than an institution providing services by way of pre school education and education up to higher secondary school or equivalent.
Provided further that nothing contained in sub-item (v) of item (b) shall apply to an institution providing services by way of, – (i) pre-school education and education up to higher secondary school or equivalent; or (ii) education as a part of an approved vocational education course.
Meaning of Educational Institution:
As per clause (y) of Para-2 of the notification No. 12/2017-Central Tax (Rate), “Educational institution” means an institute providing services by way of: –
(i) preschool education and education up to higher secondary school or equivalent.
(ii) education as a part of curriculum for obtaining a qualification recognised by any law for time being in force
(iii) education as a part of an approved vocational education course
Meaning of Vocational education course:
As per clause (h) of para 2 of the notification No. 12/2017-Central Tax (Rate), “approved vocational educational” course means:-
(i) 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) or
(ii) 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.
Analysis
As per above legal provision, Services provided by Educational Institution which are providing services by way of preschool education, education up to higher secondary school are not liable to charge GST on outward supply of services to its student, faculty and staff.
Further education services as a part of a curriculum for obtaining a qualification recognised by any for time being in force is exempt from GST. It is important to note that the services should be delivered as a part of curriculum such as conduct of degree courses by colleges, universities or institutions which lead to grant of qualification recognized by law. Training or coaching given by private institution are not covered under exemption entry as such training or coaching does not lead to a qualification recognized by law. Further institution which are providing education services which lead to qualification recognized by a law of foreign country is also not exempt under GST.
The third category is services by way of education as a part of approved vocational education course. It is important to note that only approved vocational education course which are defined under the notification no. 12/2017 (as mentioned above) is exempt under GST. All other vocational course is leviable to GST.
B. Services by an entity registered under section 12AA of Income Tax Act, 1961
As per entry 1 of the Notification No. 12/2017 Central Tax (Rate) dated 28/06/2017, Services by an entity registered under section 12AA of Income Tax Act, 1961 by way of charitable activities are exempt from GST.
Meaning of Charitable activities (to the extent of Education services)
As per sub clause(iii) of clause (r) of Para 2 of the Notification No. 12/2017 Central Tax (Rate) dated 28/06/2017. “Charitable activities” means activities relating to-
(iii) advancement of educational programme or skill development relating to
- abandoned, orphaned or homeless children;
- physically or mentally abused and traumatized persons;
- prisoners; or
- persons over the age of 65 years residing in a rural area.
Analysis
In order to claim exemption towards education services under this entry, the entity should be registered under section 12AA of Income Tax Act, 1961 as well as education services provided by such entity should be qualify as charitable activities as defined under sub clause (iii) of clause (r) of Para 2 of the notification No. 12/2017 (as mentioned above).
C. Conclusion
In light of above discussion and legal position, all services by way of education are not exempt under GST. Only those education services which qualify exemption test either under entry 66 or entry 1 of the notification no. 12/2017 are exempted from GST.
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Disclaimer
This article is for the purpose of information and shall not be used as a legal opinion and not be used for rendering any professional advice. This article is written on the basis of the author’s personal experience and provision applicable as on the date of writing of this article.
Author Bio
As per your article, only the core services of Education are exempt under Sl.No. 66(a) of Notification No.12/2017. The notification speaks only about the nature of the institution and not about the nature of the courses offered. If anybody interprets that any service provided by the specified institutions to its students can enjoy exemption, what could be the contra argument?