Introduction :-
Taxing the Education Sector has always been a sensitive issue, as education is seen more as a social activity than a business one. The government has a constitutional obligation to provide free and compulsory elementary education to every child. Thus, to promote education, it would be beneficial if educational services are exempted from tax. However, commercialisation of education is also a reality. The distinction between core and ancillary education is blurring and education is now an organised industry with huge revenues. Education service are taxable by 18% as per the Rate notification but some service which require for the social cause of the government made exempt with notifications. So in simple word, education is taxable service not an exempt service in the Act.
Classification of Education Services: Education Services are classified in heading 9992 (as per Notification No. 11/2017-Central Tax (Rate)) Primary as 18% Tax, further there are certain exemption in which there is exemption in the education services under the heading of 9963 and 9966 or 9973, which means service except these 3 heading will be considered in the heading 9992, if belong to the education and will be charged on Rate of 18% as per the Act.
| Heading and Group | Particulars | Tax Rate |
| Heading no. 9992 | Education services | 9% +9% = 18% |
| Heading No 9992 or 9963 | Services provided –
(a) by an educational institution to its students, faculty and staff. (aa) by an educational institution by way of conduct of entrance examination against consideration in the form of entrance fee. _____________________________ (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 house-keeping 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-items (i), (ii) and (iii) of item (b) shall apply to an educational institution other than an institution providing services by way of pre-school educational and educational 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) preschool educational and educational up to higher secondary school or equivalent; or (ii) educational as a part of an approved vocational educational course. |
Nil |
| Heading No 9966 or 9973 | Services by way of giving on hire
(c) motor vehicle for transport of students, faculty and staff, to a person providing services of transportation of students, faculty and staff to an educational institution providing services by way of pre-school educational and educational upto higher secondary school or equivalent |
Nil |
| Heading NO 9983 or 9985 or 9992 | Any services provided by, _
(a) the National Skill Development Corporation set up by the Government of India. (b) a Sector Skill Council approved by the National Skill Development Corporation. (c) an assessment agency approved by the Sector Skill Council or the National Skill Development Corporation. (d) a training partner approved by the National Skill Development Corporation or the Sector Skill Council, in relation to- (i) the National Skill Development Programme implemented by the National Skill Development Corporation; or (ii) a vocational skill development course under the National Skill Certification and Monetary Reward Scheme; or (iii) any other Scheme implemented by the National Skill Development Corporation. |
Nil |
Analysis of Education Services with meaning and taxability :- before the going forward, I will discuss some word used in these notification as per the Act, if given or in notification itself or otherwise as per the court judgement.
1. What is the meaning of education in the GST?
2. Who is to be considered as educational institution and output service are exempt?
3. Which input service service are considered without taxable/exempt for the EI receiver.
Meaning of education in the GST law :- meaning of education is not defined in the Act or rules made thereunder, so as per the standard practice, we shall go with decision of the Supreme Court of High court for the education meaning, decision of Hon’ble Supreme Court in the case of Sole Trustee Loka Shikshana Turst vs Commissioner Of Income Tax 1971 are considered as base decision for the purpose of Income Tax Law, this decision was for the purpose of definition of the Income Tax Act 1961, in this decision, court has touched the definition of the education in the Income Tax Act 1922 also. The issue in that case for the taking exemption benefit by the charitable trust for the providing services in relation to poor, education etc being Income tax not charged on income form these services. In this case, the lawyer of the appellant was Mr. Nani Palkhivala. It is observed by SC in the decision clause about the education is that “What education connotes in that clause is the process of training and developing the knowledge, skill, mind and character of students by formal schooling.”
It is also observed in this decision that “The sense in which the word “education” has been used in section 2(15) is the systematic instruction, schooling or training given to young in preparation for the work of life. It also connotes the whole course of scholastic instruction which a person has received. The word “education” has not been used in that wide and extended sense according to which every acquisition of further knowledge constitutes education.”
So it can be saying that It is irrelevant whether the educational courses or programmes are part of regular curriculum of any university / education programme. Even if these are just skill development/ enhancement courses / programs, it meets the requirements for being regarded as “education”
A combined reading of the judicial precedents in Sole Trustee, Lok Shikshna Trust vs. CIT ; Divya Yog Mandir Trust vs. Jt. CIT , Delhi Music Society vs. Director General of Income Tax (Mentioned below) and Shivanand Yog Vedant Natraj Society vs. ITO leads us to proper understanding of the word “education”. The word “education” is to be interpreted widely and liberally. What “education” connotes is the process of training and developing the knowledge skill, mind and character of student of normal schooling and includes systematic instruction, schooling or training given to the young in preparation for the work of life. It also connotes the whole course of scholastic instruction given to a person. When activities are carried out like any school or educational institution in a systematic manner with regular classes, vacations, attendance requirements, enforcement of discipline and so on ; requirements for the activities to be regarded as “education” are met. Any form of educational activity involving imparting of systematic training to develop the knowledge, skill, mind and character of student is also to be regarded as “education”
What is educational institutional ;-Hon’ble Jurisdictional High Court in the case of Delhi Music Society v. Director General of Income-tax (2012) held that where any school or educational institution is being run in a systematic manner with regular classes, vacations, attendance requirements, enforcement of discipline and so on; it meets the requirement of an educational institution
In the Act, definition of the EI is defined in the Notification 12/2017 in the definition clause of part 2 of the notification in the Y heading as follows.
“educational institution” means an institution providing services by way of,-
(i) pre-school education and education up to higher secondary school or equivalent.
there is no clause in this list for the school providing service as per the Rajasthan Board or CBSE or even USA education Board is also exempt upto the higher secondary education.
(ii) education as a part of a curriculum for obtaining a qualification recognised by any law for the time being in force; (it means education service given by the education of any degree given by the college which is affiliated with any university which is recognised by UGC for the purpose of high education, it will automatically covered in the EI and by virtue of Heading 9963 given to the students are exempt.
If a foreign university has branch/palace of business in india and giving degree of their students as per their policy, then it is not an education institute because this degree is not valid in Indian law, so their service/fee income will be taxable in the GST as per the applicable Rate.
(iii) education as a part of an approved vocational education course.
Approved Vocational Education Course (Notification 12/2017, definition Clause Part h)
(h) “approved vocational education 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.
If any vocational course is coming in the above definition, then only these services are exempt, rest are taxable in the Law.
On the summation of these above, if can be concluded that if school is running till 12th, then always taxable, if providing degree/qualification, then if the course/college are registered with Indian university, then only exemption benefit are taken and third most important, if EI are providing service for the vocational courses, then same need to affiliated with NCVT or SCVT only, rest are not exempt and GST will be charged on their services.
If these services provided to the faculty or staff, then also they are exempt.
(aa) by way of conduct of entrance examination against consideration in the form of entrance fee; – this is also exempt service, but restricted only for the entrance exam, if service is providing by EI for conducting any the Yearly exam of any other school/university, then same is Taxable. Exemption is for the entrance exam of any kind only.
It is to be noted that only those institutions whose operations conform to the specifics given in the definition of the term “Educational Institution”, would be treated as one and entitled to avail exemptions provided by the law. This would mean that private coaching centres or other unrecognized institutions, though self-styled as educational institutions, would not be treated as educational institutions under GST and thus cannot avail exemptions available to an educational institution.
Input service which are exempt from levy of the GST :- below are the extract of the the Heading No 9963 of GST Rate :-
(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 house-keeping 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-items (i), (ii) and (iii) of item (b) shall apply to an educational institution other than an institution providing services by way of pre-school educational and educational 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) preschool educational and educational up to higher secondary school or equivalent; or (ii) educational as a part of an approved vocational educational course
Analysis of the exempt input service :-
Input of these (I) to (III) services are exempt only in the case of preschool and school upto 12th standard only, these input service exemption are not applicable for the college or vocational courses, if college hire the buses for the transportation of the students, then the transporter has to charge the GST at the time of raising the bill and so on for the clause (ii) and (iii) also. (As per the first Prosiso of Entry No 66)
Clause iii service are exempt only if they are provided within the premises of the EI, e.g. if a EI has given contract for the sport ground which is used for the outdoor games for the cleaning and maintenance, then there is no exemption to the EI and supplier has to charge GST on the bill amount.
To clause iv, input service is exempted for all type of EI if same is taken for the purpose of admission or exam purpose, e.g. if an EI of Jaipur has appoint Mr. A at Jodhpur for the coordination for the students belong to the Jodhpur for the admission in the college situated at Jaipur, in that case Mr. A need not charge the GST on the bill raise for the service to EI as same is related to the admission and these are exempt by the clause iv for all the three type of EI.
FAQ and their Answer :-
Q 1. if an EI takes a property on the rent for the purpose of running the school, then whether service provider will charge on the input service to the EI –
Entry No 12 which deal for the rental service exempt the service for the way of renting of residential dwelling for use as residence, in this case, the building are either commercial or institutional nature not residential, so GST is applicable on this input service to the EI if the supplier cross the threshold limit for the registration as per the law.
E.g. Mr. A is having a business with TO 30 Lacs and given a building on rent to a school with rental charges of Rs. 11 lacs Per Year. As per the above, GST is applicable on this service, since the total TO/Receipts of the PAN No of Mr. A exceed 40 Lacs, so he is liable to get registered, and now he is RP in the GST Law, so service provided by him to the school in the Nature of let out the building will attract the GST
In this type of cases, one need to understood whether supplier are liable to get registered as per the law, if Yes, then GST will be charged, if No, then being receipts lower than the exemption limit, then no GST will be charged.
Q 2. Catering service used by the EI :– if the catering services is one of the services provided by an EI to its students in their premises, faculty, and staff, then same is exempt. (Circular No 28/2/2018 – GST).
Supply of food and drinks in a mess or canteen in an EI attracts GST 5% without ITC.
Q 3. Hostel Services :- Press release dated 13-07-2017, the services of lodging, boarding in hostel provided by the EI which are providing Pre education and Education upto 12th or education related by qualification of law i.e. college are exempt from the GST, if vocation courses institute are providing hostel, then GST are applicable.
Q 4. if Other courses provided by the EI to college/school student which are for the knowledge purpose/improvement purpose of student i.e. GST courses/tally courses etc with additional fee apart from the school or college syllabus :- since these courses are not recognised by the law, so the institute are not considered as EI for the purpose of GST, without the EI, this is covered in the entry No 992 and then GST are applicable on the receipts of these courses.
Q 5. If a school gives their swimming pool/ground for the rent in the off season to anyone for the use, then whether GST is chargeable for the same – Yes, GST applicable for the this service given by the EI, service receipts related to the service provided to the students/faculty are exempted, since service provided to the other person such as sports academy/other person, so if the EI having receipts more than 20 Lacs, then they are required to registered as per the GST Act and charge the GST on the service and deposit to this to the government as per the law.
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