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Margesh Rai
| Updated: 17 Jun, 2020 | Category: Goods and Service Tax

Know about the Taxation of Educational Institutions under GST

Educational Institutions under GST

Educational institutions under GST are those institutions that provide services through education as a part of a vocational education course that is approved, pre-school education as well as education up to higher secondary school or even equivalent, and education as a curriculum part for getting a qualification recognized by law for the time being in effect. 

Higher Educational Institutions under GST

  • Services rendered to higher educational institutions under GST are taxable; on the other hand, services provided by educational institutions don’t fall under the GST purview.
  • Schools from pre-school to higher secondary school or even the equivalent would get the GST exemption on procurements.
  • Consequently, the input or the supply of services like housekeeping, transportation, catering services, and services concerning admission, as well as the conduct of examination to higher educational institutions, would have to bear the GST charged.
  • It would have to get borne from the end of higher educational institutions.

Taxability of Education Services under GST

Meaning of Taxable Supply- A taxable supply is all about the supply of goods/services or both of them on which tax would get levied under GST. Given below is the list of services provided by an educational institution to another educational institution or staff, faculty, and students of its own won’t get charged under GST.

  • Services like house-keeping, cleaning or security performed within such an education institution
  • Transportation facilities for staff, students or faculty members
  • Services concerning admission to such institution or conduct of examination by the institution of such a type or up to higher secondary
  • Catering (Also incorporating any mid-day meals scheme) that gets sponsored either by the State Government, Central Government, or Union Territory
  • Provided that any service rendered to any educational institution other than those that render services through education up to higher secondary school or even equivalent and pre-school education would be treated as a taxable service under the GST regime.
Note: The GST Rate for Educational Services in Heading No. 9992 is- 9%+9% = 18%.

Read our article: GST on Transportation- Applicability & Exemptions

Is Registration Required for the Educational Institutions under GST Regime?

GST Registration is not necessary for those institutions that provide only education as a service, and such fees would get charged at the NIL rate.

Those educational institutions are liable to get registered under GST that provides other services or supplies. Here, the additional services or other supplies are providing uniforms to students, providing shoes to students, providing books to students, etc.

Books or Stationery Distributed to Students

Taxation of Educational Institutions under GST

Is GST Applicable on Yoga Programs, Training Programs, Camps, and Other Events?

Commercial activities like yoga programs, training programs, camps, and other events are taxable under GST.

Applicability of GST on Distance Education and Private Coaching Centres

  • GST is chargeable at 18% on distance education taken up for higher education.
  • Since private institutions, as well as coaching centres, don’t follow any specific curriculum.
  • Also, they don’t provide an award for excellence or any qualification and don’t conduct any exam; GST is chargeable on such institutions at the rate of 18%.

Even though a major chunk of India’s population is not above the age of 25, the value of education in India deserves more attention in order to provide a better foundation for the nation’s future providers. Looking at the increasing population and unending poverty in India, we must say that education must be available at a low cost so that it would become affordable for all the sections of society. GST implementation[1] has accelerated the cost of distance education and higher education. However, the government has started considering this point, and hopefully, something better would happen for these sectors as well. 

Exemptions Available to Educational Institutions under GST

Exemptions allowed to the services rendered by the IIM-

  • Fellow programs in Management
  • Two-year residential full-time post-graduation programs in Management for PG Diploma in Management, wherein admission is available through CAT
  • Five-year integrated program in Management Studies (Excluding Executive Development Program)

Incomes from education get a complete exemption from goods and service tax:- if a charitable institution or trust is operating and managing a school, college or other educational institutions for underprivileged ones, homeless children, orphans, abandoned ones, physically or mentally abused ones, prisoners or 65 years old people or people above the age of 65 years living in rural regions.

Education facilities provided by the institutions or organizations hereinafter are exempted under GST-

  • Scheme of any type implemented by National Skill Development Corporation with training partners
  • NSDC approved sector skill councils
  • National Skill Development Corporation instituted by the government
  • NSDC approved assessment agencies
  • Programs of National Skill Development got approved by National Skill Development Corporation; Vocational Skill Development Program got approval under the National Skill Certification & Monetary Reward Scheme
  • Since activities of education carried out by governmental authority or local authority or government are not a part of the purview of supply of services, they are exempted from GST. Example- Municipal Schools or Government Schools.

Take Away

Through this article, we have covered the taxability of different types of educational institutions under GST. The way our government focuses on schools and provides exemptions, the same kind of attention is the need of the hour for higher educational institutions. In the upcoming years, we would probably get to see changes in the GST provisions, and new taxation laws concerning higher educational institutions under GST would come into effect.

Read our article: GST on Legal Services in India: Taxability of Legal Services under GST

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Margesh Rai

Being a poetry lover, and an avid reader, Margesh is fanatical about legal content writing. After completing graduation in B.Com(H), he decided to follow his passion. Writing impeccable in-depth content about legal and finance-related topics is his biggest forte.

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