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Everything to Know about GST on Education Sector

Taxing the Education Sector has always been a sensitive issue, as education is seen more as a social activity than a business one. Thus, to promote education, it would be beneficial if educational services are exempted from tax. However, commercialisation of education is also a reality. The distinction between core and ancillary education is blurring and education is now an organised industry with huge revenues. 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%.


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In this article, we will discuss complete details about GST on Education Sector including Exemption Notifications, Clarifications & various principles prescribed in CBIC Education Guide regarding Education Sector.


Article will Include


Various Kind of Education Services as being prescribed in Service Accounting Code


As per Scheme of Service Accounting Codes (SAC) as prescribed in GST Rate Notification 11/2017, following kind of Education Service is being prescribed:


Caution: Below mentioned GST Rates are subject to Exemption Notification i.e. If not exempt under any exemption Notification, GST Rate will be 18%. (Applicable to all entries)

Service Accounting Code (SAC)

Particulars

GST Rate

9992

Education Service

18%

99921

Pre-primary education services

18%

99922

Primary education services

18%

99923

Secondary education services (General, technical, vocational)

18%

99924

Higher education services (General,Technical,vocational,others)

18%

99925

Specialised education services

18%

999291

Cultural education services

18%

999292

Sports and recreation education services

18%

999293

Commercial training and coaching services

18%

999294

Other education and training services nowhere else classified

18%

999295

services involving conduct of examination for admission to educational institutions

18%

999299

Other educational support services

18%


Detailed Analysis of Various Exemption Notification issued


As per S.No. 66 of N.No. 12/2017 as amended Education service is exempt from GST into two Categories


A. Services Provided by the Education Institution


  • to its students, faculty and staff; or

  • Conduct of Entrance Examination against consideration in the form of entrance fee. (This was inserted later w.e.f. 25.01.2018 as Fee collected from students against entrance exam was not covered in above entry as students paying fee are not its students).


Further, Education Institution has been defined as:


Educational institution” means an institution providing services by way of,-

(i) pre-school education and education up to higher secondary school or equivalent;

(ii) education as a part of a curriculum for obtaining a qualification recognised by any law for the time being in force;

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


Explanation:

For removal of doubts, it is clarified that the Central and State Educational Boards shall be treated as Educational Institution for the limited purpose of providing services by way of conduct of examination to the students.


From above, it is clear that Services by International Schools by way of education up to higher secondary school or equivalent are covered in the entry (i) above.


But here point of contention is related to Entry-(ii) related to determination of whether it is a part of a curriculum for obtaining a qualification recognised by any law for the time being in force. In this regards, CBIC Education guide issued during Service Tax Regime may be referred which defines this as:


It means that only such educational services are covered which are related to delivery of education as ‘a part’ of the curriculum that has been prescribed for obtaining a qualification prescribed by law.

It is important to understand that to be in the exemption, the service should be delivered as part of curriculum. Conduct of degree courses by colleges, universities or institutions which lead grant of qualifications recognized by law would be covered.


Training given by private coaching institutes would not be covered as such training does not lead to grant of a recognized qualification.


Similarly, 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 does not cover in this entry. (even though education service provider here is Indian College)


Similarly, Courses offered by Foreign Universities not recognised in India under law are not exempt.


Further, Approved vocational education course (point iii) has been defined as:


i) 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


(ii) 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


B. Services Provided to the Education Institution by Anyone by way of,-


Exemptions for all below mentioned services provided to pre-school education and education up to higher secondary school or equivalent are available:


(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 house-keeping services performed in such educational institution; (iv) services relating to admission to, or conduct of examination by, such institution;

(v) Supply of online educational journals or periodicals.


Exemptions for only services mentioned at point (iv) & (v) provided to Educational Institution providing approved vocational education course are available.


For all other Educational Institutions, Exemption for only service mentioned at point (iv) is available.


GST on Private Coaching including Books provided by them


As discussed above, since private coaching centres are not providing education as a part of a curriculum for obtaining a qualification recognised by any law for the time being in force. Therefore, as per the provisions of GST, Private Coaching Centres are not considered as Educational Institution. Accordingly, they need to pay GST on the coaching Fee provided collected by the Private Coaching Centres.


Next Question is whether, they needs to Pay GST on Books provided separately for consideration to the students.


Though Books carry NIL rate of GST in terms of Notification 2/2017 dated 28.06.2017 as amended (S.No. 119, HSN 4901), but here it appears that Books are provided as part of overall coaching to the students not as an independent identity.


Therefore, it will be considered as composite supply where the principal supply is Provision of coaching. Accordingly, it will be taxed like coaching service in terms of Section-8 i.e. GST needs to be paid at 18% on Books Provided by the Coaching Centre to the students.

"composite supply" means a supply made by a taxable person to a recipient consisting of two or more taxable supplies of goods or services or both, or any combination thereof, which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply;

Similarly, in case other products like dress, bag etc. are also provided to the students as part of coaching, they will also be taxed like coaching service instead of specific rates related to these products.


Further, teachers who are not working like employees in these coaching centres also needs to pay GST on their service at the rate of 18% if their turnover is more than threshold limit.


GST on Foreign Universities or Foreign courses by Indian Universities


As discussed above, since Foreign Universities are not providing education as a part of a curriculum for obtaining a qualification recognised by any law in India for the time being in force. Therefore, as per the provisions of GST, Foreign Universities or foreign courses (not approved in India) by the Indian Universities are not considered as Educational Institution. Accordingly, they need to pay GST.


GST on various Online Education courses Provided from India or outside India


As per Section 2(17) of IGST Act, 2017, Services whose delivery is mediated by the information technology over the internet or an electronic network and the nature of which renders their supply impossible to ensure in the absence of information technology are considered as Online Information and Database Access or Retrieval Services (OIDAR).


GST provisions in case Online Education Course is provided from India


In case course is being provided by the Education Institution related to courses recognised by law are exempt. For instance Graduation or Post Graduation Courses offered by Indian Universities through online mode is exempt from GST.


In case, course is not recognised, in that GST needs to be discharged as per normal provisions by the Service Provider. Further, whether it will be intra-state or inter-state supply will depend upon the address on record of the student.


For instance, Course Provider is in Delhi and Student Address on record is of Haryana, It will be inter-state supply.


GST provisions in case Online Education Course is provided from Outside India


First of all, it should be noted that it is not an exempt supply. However, Taxability of Online Education Course is very complex in nature. The same has been simplified by us in a separate article which can be read at : GST on OIDAR Service


Summary of Provisions are summarised as below:





Some Case Studies in Qns & Answer Form including Circulars


Whether GST is applicable on fee charged for entrance or the fee charged for issuance of eligibility certificate for admission or for issuance of migration certificate by educational Institutions


Answer is No as it is a service by Educational Institution to its students. (Circular No. 177/09/2022-TRU)


Whether GST is applicable on Affiliation fee charged by the Universities from Affiliated Colleges


Answer is Yes, because this Fees/charges are recovered from the colleges not the students.


Whether GST is applicable on Food Served to the students (Mid-Day, Aganwadi etc.)


It is clarified that services provided to an educational institution by way of serving of food ( catering including mid- day meals) is exempt from levy of GST irrespective of its funding from government grants or corporate donations [under said entry 66 (b)(ii)].


GST Provisions on Indian Institute of Management (IIM)

For taxability/exemptions to various courses of IIM, please read circular


CCT Circular No.7-2019 on IIMs
.pdf
Download PDF • 4.65MB

Note, there are various other exemptions available related to Sports, Training, Skill Development etc.


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Disclaimer: We have taken due care to the best of our knowledge while explaining the provisions surrounding the issue purely for informational/academic purpose. It should not be considered as professional advice or consultancy to be relied upon. While due care has been taken by Fab Gyan in preparing this article, certain mistakes and omissions may creep in. The Fab Gyan or its Author does not accept any liability for any loss or damage of any kind arising out of any inaccurate or incomplete information in this document nor for any actions taken in reliance thereon.


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