Education as a sector is of pre-eminent importance to an economy. For the Indian government, it has always been a sector of high importance, with the objective of providing low-cost education to all. Hence, the education sector has always enjoyed significant tax exemptions and does not feature on the negative list.
Post the implementation of GST, a similar trend continues, as most tax exemptions have been retained. Apart from this, educational services and other services that are related to education/higher education, are now covered under the GST exempt list. Here’s taking a look at the impact of GST, on the education sector:
Under GST, services provided by educational institutions, have been kept away from the GST taxable categories. Education institutions by definition here, mean any of the following:
- Pre-school up to higher secondary or equivalent
- Education which part of a curriculum, aimed at the obtaining of a qualification, as recognized by law
- Education which is part of approved vocational courses
Education-related services that are exempted:
- Curriculum/course materials
- Assessment/examination fees
- Student administrative services, such as registration, academic transcripts, issuing/replacing student cards, late fee payments etc.
- Excursion/field trips related to the course /curriculum (Food provided etc. are not exempted)
- Services provided to students/faculty/staff:
- Transportation of students/faculty/staff
- Catering, including any mid-day meals scheme sponsored by the Government;
- Security/cleaning/house-keeping services
- Services relating to admission/conduct of examination (up to higher secondary)
Certain services provided by IIMs that are exempted:
- 2 year full-time residential PG programs in Management for Post Graduate Diploma in Management (admissions via CAT)
- Fellowship programs in Management
- 5 Year Integrated Programs in management studies (excludes the Executive Development Program).
Education provided by institutions/corporations below are also exempted from GST:
- National Skill Development Corporation set up by Indian government
- National Skill Development Corporation approved sector skill councils
- National Skill Development Corporation approved assessment agencies
- The national skill development programs approved by NSDC
- A vocational skill development program approved under national skill certification and monetary reward scheme
- Any scheme implemented by NSDC with training partners
Services/supplies not exempted from GST:
- Education supplies provided by third parties e.g. sports equipment, computer, musical instruments etc.
- After school activities that are offered by third parties directly
- Food/accommodation as provided in excursions
- Uniform, stationary etc. (non-educational supplies)
Education provided by higher/private institutions:
Education provided by pre-school till higher secondary, by private institutions is exempted from GST. Though education via private institutions may get more expensive by 3%-5%, due to other GST taxes levied (operational costs, supplies etc.). Other institutions that are not exempted from the GST list, will get taxed up to 18%.
Coaching institutes are not exempted from GST and will attract a tax of 18% (earlier 14%). This means that competitive exam aspirants will now have to shell out more money.
While basic education requirements and services remain tax-free, private institutions and supplies will see a slightly enhanced tax rate, under the new regime. This also impacts entrance examination fees, for various competitive exams. What do you think about the impact of GST on the education sector? Write to us your views in the comments section below.