Article 21A of the Indian constitution makes education as fundamental right of all children of the age of 6 to 14 where Govt shall provide free and compulsory education to all such children. Under GST also, the government in order to promote education in our country, gives many exemption to the Educational Institutions.

Education Institute means,

Pre-school education and education up to higher secondary school or equivalent;

(ii) Education as a part of curriculum for obtaining a qualification recognized by any Indian as well as International law for the time being in force (i.e. Any college conducted qualification course which is affiliated by a university and the degree is governed by the law);

(iii) Education as a part of an approved vocational education course.

Any services provided by the education institutes whether they are approved or run by the private organization and not govt. approved to the staff, students and faculty members are exempt from GST.

GST on Education Institutes

Any auxiliary services like catering, transportation, security, housekeeping services, mid day scheme governed by the Central or State Govt., examiner, invilgilator, admission related services, conduct examination related services provided to education institutes for its students, staff and faculty by any person are not subject to GST and exempt from GST. But this exemption is only for education institutions who are engaged in providing services related to Pre-school education and education upto higher secondary school only and for rest education institutes, the GST is chargeable by the person who is providing these auxiliary services.

Private Couching and training centers which are involved in providing training related to the degree recognized by the law in force are not exempt from GST and same would be liable to pay GST on receipts.

If the education institutes conduct or organize a seminar/conference/workshop for the people other than its students, staff and faculty are not exempt from GST and same would GST Chargeable.

Any fees charged by the education institutes for organizing a campus placement event for prospective employers are not exempt from GST and same would be chargeable under GST.

Following are some examples where the education institute are liable to pay GST on the services other than the educational services,

  • Renting immovable property for commercial use under forward charge
  • Sponsorship revenues received from non-corporate entities under RCM
  • Receiving security services from non-corporate entities under RCM
  • Sale of capital assets

18% GST will be charged on all the services other than the exempt services.

Sometimes, bundled services offered by the educational institutes like in boarding schools education services are offered along with lodging and food. If the services are naturally bundled and is bundled in the ordinary course of business are composite supplies and therefore principal component is relevant part in the bundled services for determining the taxability of Services. If the services are artificially bundled then same would be treated as mixed supply of services and GST will be chargeable on that services and highest rate would be charged among those artificially bundled services. Example of artificial bundled service is, Provision of dual qualifications is in the nature of two separate services as the curriculum and fees for each of such qualifications are prescribed separately. Service in respect of each qualification would, therefore, be assessed separately.

In case you need any legal assistance or legal advice, you may contact us at [email protected]

This article is written by Rahul Grover, who is the Managing Partner of Raag Consultants.

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March 2021