Goods and Service Tax

A Complete Understanding on Applicability of GST on Education Programs

calendar21 Mar, 2023
timeReading Time: 4 Minutes
A Complete Understanding on Applicability of GST on Education Programs

According to the GST Act, “Education Services” are defined as services provided by an educational institution to its students, faculty, and staff. These services include pre-school education, primary education, higher secondary education, vocational education, technical education, and higher education. The GST on education services applies to both public and private educational institutions. This article discusses about taxability of GST on Education programs. The Goods and Services Tax (GST) is a consumption-based tax levied on the supply of goods & services in India. Education services are also subject to GST. Let’s discuss the GST on education services in detail.

GST on Education Services

The GST on education services is divided into two categories, which are as follows:

  • Exempted Services: Services provided by an educational institution to its students, faculty & staff are exempt from GST. This means that educational institutions do not have to pay GST on their services.
  • Taxable Services: Services provided by an educational institution to a person who is not a student, faculty, or staff of the institution are taxable under GST. This includes services such as transportation, canteen services, security services, and renting of premise
  • Input Tax Credit (ITC): Educational institutions are not eligible to claim ITC on the GST paid on goods and services used for providing exempted education services. However, if an institution provides taxable services, they can claim ITC on the GST paid on goods and services used for providing taxable services.
  • GST on Coaching Services: Coaching services provided by private coaching institutions are taxable under GST. The GST rate on coaching services is 18%. However, coaching services provided by an educational institution as a part of the curriculum are exempt from GST.

GST Tax Rate Levied On Education Institution

Under the Goods & Services Tax (GST) Act in India, the term “Educational Institution” refers to an entity that provides education as its main objective. This includes schools, colleges, universities, and other educational institutions that are approved or recognized by the appropriate authorities.

Educational institutions are considered to be non-profit entities and are exempt from paying GST on certain services they provide. For example, GST is not applicable on the fees charged for courses, but it may be applicable on goods or services provided by the institution that are not directly related to education.

It’s important to note that not all educational institutions are exempt from GST, and the exemptions may depend upon the nature of the institution and the services provided.

What Are The Exemptions That Are Available To The Educational Institution?

Educational Institutions are eligible for exemptions are as follows:

  • If a charitable trust operates a school, college, or educational facility for abandoned, orphaned, homeless children, people who have been physically or mentally abused, people in prison, or people who are 65 years of age or older & live in a rural area, all of their educational income is completely exempt from GST.
  • Education activities run by municipal, state, or federal governments are exempt from the GST because they do not fall under the definition of services. Government and municipal schools are two examples.

Some Educational Services Mentioned Below Are Also Exempted In The GST:

  1. The Indian government established the National Skill Development Corporation[1]
  2. Sector skill councils that have been approved by the National Skill Development Corporation
  3. National Skill Development Corporation recognized evaluation organization.
  4. The NSDC-approved National Skill Development programs
  5. The National Skill Certification and Financial Reward Scheme has approved a vocational skill development programme.
  6. Every programme that NSDC implements with training partners
  7. Exemption has also been granted to the services provided by the IIM-
    • 2 year full-time residential PG programs in Management for Post Graduate Diploma in Management, admission in which is granted via CAT
    • Fellowship programs in Management
    • 5 Year Integrated Programs in management studies (but excludes the Executive Development Program).

Rates of GST on Education Services and Programs

The rates of GST on education services (as per Notification No. 11/2017-Central Tax (Rate), Notification No. 11/2017-Central Tax (Rate) and Notification No. 12/2017-Central Tax (Rate) all dated 28.06.2017 as amended) are as below:

Description of Service Rate/Notification (in Percentage)  
1. Education Services 18% ( 9% Central Tax + 9% State Tax)/ Serial No. 30 of Notification No. 11/2017-Central Tax (Rate) dated 28th June, 2017  
2. Services provided – (a) by an educational institution to its students, faculty & staff; (b) to an educational institution, by way of, –   (i) transportation of students, faculty & staff; (ii) catering, comprising any mid-day meals scheme sponsored by the Central Government of India, State Government/Union territory; (iii) security/cleaning/housekeeping services performed in such educational institution; (iv) A services relating to admission to/conduct of examination by, such educational institution; up to higher secondary: given that nothing contained in entry (b) shall apply to an educational institution or organisation other than an educational institution providing services by way of pre-school education & education up to higher secondary school or equivalent NIL/Serial No. 66 of Notification No. 12/2017- Central Tax (Rate) dated 28th June, 2017
3. Services provided by the Indian Institutes of Management (IIM), as per the guidelines of the Central Government of India, to their students, by way of the following educational programmes, except EDP or Executive Development Programme: – (a) 2 year full time Post Graduate (PG) Programmes in Management for the Post Graduate (PG) Diploma in Management, to which admissions are made on the basis of CAT or Common Admission Test conducted by the IIM or Indian Institute of Management; (b) fellow programme in Management; (c) 5 year integrated programme in Management. NIL / Serial No. 67 of Notification No. 12/2017- Central Tax (Rate) dated 28th June, 2017
4. Technical aids for education, rehabilitation, vocational training & employment of the blind like Braille typewriters, Braille watches, teaching & learning aids, games & other instruments and vocational aids specifically adapted for use of the blind Braille instruments, paper etc.     5. Instruments, apparatus & models, designed for the demonstrational purposes (for example, in education/exhibitions), unsuitable for other uses 5%/ Serial No. 257 of Schedule I of the Notification No. 1/2017-Central Tax (Rate) dated 28th June, 2017                   28 %/ Serial No. 191 of Schedule IV of the Notification No. 1/2017-Central Tax (Rate) dated 28th June, 2017  

Conclusion

The GST on education services applies to both public and private educational institutions. Educational Institutions are exempt from GST on services provided to students, faculty, and staff. However, if they provide taxable services, they are eligible for ITC on the GST paid on goods and services used for providing taxable services. Coaching services provided by private coaching institutions are taxable under GST, but coaching services provided by an educational institution as a part of the curriculum are exempt from GST.

Also Read:
Know About The Taxation Of Educational Institutions Under GST
Impact Of GST On Educational Institutions And Exemptions

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