GST on Education Services

[CA.VINOD CHAURASIA]

Introduction: This article discusses in details GST taxability on education sector.

Education is the process of training and developing knowledge, skill and character of students by normal schooling.

The GST Act tries to maintain a fine balance whereby core educational services provided and received by educational institutions are exempt and other services are sought to be taxed at the standard rate of 18%.

Auxiliary services received by such educational institutions for the purpose of education up to Higher Secondary level is also exempt from GST

Other services related  to education, not covered by the exemption would be taxed at a standard rate of 18% with full admissibility of ITC for such taxable services in cases where the output service is not exempt.

However, Services by an entity registered under section 12AA of the Income-tax Act, 1961 (43 of 1961) by way of charitable activities are exempted from GST.

Education Services are covered under forward charge. Therefore, GST shall be paid by the supplier of services.

Educational Institution means an institution providing services by way of:

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

2. Education as a part of a curriculum for obtaining a qualification recognised by any law for the time being in force;

3. Education as a part of an approved vocational education course

“Educational institution” means:

1. institutions providing services by way of education as a part of curriculum for obtaining a qualification recognised by any law for the time being in force.
2. institutions  providing  services  by  way  of  education  as  a  part    of approved vocational course

As per notification no. 12 CTR  dated 28^th June 2017, an “approved vocational education course” means, -

1. 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

2. 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.

So in view of the above,

1. Conduct of degree courses by colleges, universities or institutions which lead grant of qualifications recognized by law would be exempted from GST.

2. Training given by private coaching institutes or other unrecognised institution or self styled educational institution would not be exempted as such training does not lead to grant of a recognized qualification.

3. Services provided by way of education as a part of a prescribed curriculum for obtaining a qualification recognized by a law of a foreign country are also not exempted because the course / degree not recognized by Indian Law.

Education Services are classified in heading 9992 and are further sub-divided into six groups comprising of

1. Pre-primary education services
2. Primary education services
3. Secondary Education Services
4. Higher education services
5. Specialised education services
6. Other education & training services and educational support services

Rates of GST in education sector

GST Rates for education sector are mentioned in:

1. Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 and
2. Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017

Chapter/ Section/Heading	Description of Service	Rate / Notification
9992	Education Services	18% as per serial no 30 of notification no. 11 CTR 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) 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 as per serial no 66 of notification no. 12 CTR  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 as per serial no 67 of notification no. 12 CTR 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 blindBraille instruments, paper etc.	5% as per serial No. 257 of Schedule I of the Notification No. 1 CTR  dated 28th June, 2017
9023	Instruments, apparatus and models, designed for demonstrational purposes (for example, in education or exhibitions), unsuitable for other uses	28% as per serial No. 191 of Schedule IV of the Notification No. 1 CTR  dated 28th June, 2017

So, services provided by an educational institution to students, faculty and staff are exempt.

The output services of lodging/boarding in hostels provided by such educational institutions which are providing pre-school education and education up to higher secondary school or equivalent or education leading to a qualification recognised by law, are fully exempt from GST.

Annual subscription/fees charged as lodging/ boarding charges by such educational institutions from its students for hostel accommodation shall therefore, not attract GST.

Input services like canteen, repairs and maintenance etc. provided by private players to educational institutions are subject to GST.

As output services are exempted, the Educational institutions may not be able to avail credit of tax paid on the input side.

Auxiliary education services entry no 66 of notification no. 12, if provided to educational institutions providing degree or higher education, the same would not be exempt from GST.

The supply of placement services provided to educational institutions for securing job placements for the students shall be liable to GST.

Educational institutes such as IITs, IIMs charge a fee from prospective employers like corporate houses/ MNCs, who come  to the institutes for recruiting candidates through campus interviews in relation to campus recruitments. Such services shall also be liable to GST.

Place of Supply in education sector where BOTH the location of supplier of services and the location of the recipient of services is in India

As per section 12(6) of the IGST Act, 2017, the place of supply of services provided by way of admission to an educational or any other place and services ancillary thereto, shall be the place where the event is actually held or such other place is located.

As per section 12(7) of the IGST Act, 2017, the place of supply of services provided by way of, -

(a) organisation of a cultural, artistic, sporting, scientific, educational or entertainment event  including supply of services in relation to a conference, fair, exhibition, celebration or similar events; or

(b) services ancillary to organisation of any of the events or services referred to in clause (a), or assigning of sponsorship to such events: –

1. To a registered person, shall be the location of such person;

2. To a person other than a registered person, shall be the place where the event is actually held and

3. if the event is held outside India, the place of supply shall be the location of the recipient.

Place of supply of Educational Services where the location of the supplier of services or the location of the recipient of services is outside India

The place of supply will be the place where the event is actually held.

Composite and Mixed Supply in Education sector

• If in Boarding schools, charges  for  education and lodging and boarding are inseparable then it exempt from GST.

• 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.

 

The author is a practising CA based in Delhi and is registered Insolvency Professional. He can be reached at [email protected] , Mob. +91 9953587496.

Discussions to this article

[KASTURI SETHI]

Sir, If any institution is registered as charitable but engaged in commercial activity, do you consider it still exempted from GST ?

[KASTURI SETHI]

As per definition of charitable, "one must not charge a single penny for its activity". Commercial means activity is commercial irrespective of the fact that one has earned profit or loss. Charging from any person renders it commercial. If commercial it is out of definition of charitable may be registered under Section 12 AA of the Act. Your opinion please Sir.

[CA.VINOD CHAURASIA]

As per notification no. 12

(r) “charitable activities” means activities relating to -
(i) public health by way of ,-
(A) care or counseling of
(I) terminally ill persons or persons with severe physical or mental disability;
(II) persons afflicted with HIV or AIDS;
(III) persons addicted to a dependence-forming substance such as narcotics drugs or
alcohol; or
(B) public awareness of preventive health, family planning or prevention of HIV
infection;
(ii) advancement of religion , spirituality or yoga;

(iii) advancement of educational programmes or skill development relating to,-
(A) abandoned, orphaned or homeless children;
(B) physically or mentally abused and traumatized persons;
(C) prisoners; or
(D) persons over the age of 65 years residing in a rural area;
(iv) preservation of environment including watershed, forests and wildlife;