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How GST Will Impact Education Sector

All forms of supply of services in relation to Education sector shall not be liable to GST as decided by the GST Council. IGST shall be levied on inter-state supplies whereas CGST & SGST/ UTGST shall be levied on intra – state / union territory supplies. Education shall be exempt from GST in terms of GST law while commercial coaching and training will continue to suffer tax in the form of GST as against Service Tax at present.
Dr. Sanjiv Agarwal, FCA, FCS

The high power GST Council has announced tax rates and exemptions in its recently concluded meeting held on 18-19 May, 2017 at Srinagar (J&K).

Taxability

All forms of supply of services in relation to Education sector shall not be liable to GST as decided by the GST Council. IGST shall be levied on inter-state supplies whereas CGST & SGST/ UTGST shall be levied on intra – state / union territory supplies. Education shall be exempt from GST in terms of GST law while commercial coaching and training will continue to suffer tax in the form of GST as against Service Tax at present.

Rates of GST

GSTC finalized four rates for services: 5%, 12%, 18% and 28 %. The standard rate will be 18%. In the present regime, only service tax is leviable which is @15% inclusive of four cesses. Since no such rate is specified separately for services provided by education sector , they shall fall under category of standard rate of tax which is 18%.

Education sector (subject to specific exemptions) will have adverse impact under GST regime as the rate of services will increase from 15% to 18% leading to increase in cost by 3 percent. However, all cesses would be discontinued.

Exemptions

There is no negative list of services in GST regime. The exemptions which are provided in present regime will continue in GST regime. A specific exemption list has been notified (covered 83 activities) which also exempts the services related to education from levy of GST.

The following exemptions are provided in the GST regime in relation to education.

‘8. Services by way of-

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 Government;

(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;

upto higher secondary.

Provided that nothing contained in clause (b) of this entry 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

17. 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 residential 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 Indian Institute of Management;

(b) fellow programme in Management;

(c) five year integrated programme in Management

30. Services of public libraries by way of lending of books, publications or any other knowledge-enhancing content or material.’

Thus, exemption under S.No. 8(a) will be available to all educational institutions but under S.No. 8(b) will be available only in relation to pre- school or school education. Services of public libraries would also be exempt. Educational programmes of IIM’s except executive development programmes will also be exempt from GST. These exemptions are already allowed in present Service Tax era.

View Comments (2)

  • What is the definition for Educational Institutions? Whether a coaching centre coaching persons for I AS preparations will fall.under this or not?

  • is it service excempt under gst on vcaotional institue? if yes or no then plese spcify the notification no.

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