Taxation of Educational Institutions under GST

Educational institutions provide the noble service of educating children for a better future. It's vital to understand the impact of GST on the services offered by educational or academic institutions—whether a school, college, or professional training institute—because it will directly affect your pockets. The article includes detailed information on this aspect.

What is an educational institution under GST?

Under?GST, “educational institution” is defined as an institution providing services by way of:

• Pre-school education and education up to higher secondary school or equivalent;
• Education as a part of a curriculum for obtaining a qualification recognised by any law for the time being in force;
• Education as a part of an approved vocational education course;

Are educational services considered as supply and its taxability

Taxable supply means a supply of goods or services or both which is leviable to tax under GST. The following services provided by an educational institution to its students, faculty and staff or to an educational institution are not required to be taxed under GST.

• Transportation of students, faculty and staff
• Catering, including any mid-day meals scheme sponsored by the Central Government, State Government or Union territory Security or cleaning or house-keeping services performed in such educational institutions
• Services relating to admission to, or conduct of examination by, such institutions up to higher secondary

While services provided by an educational institution are out of the GST ambit, the same is not the case with services provided to an educational institution. The GST exemption on procurements is available only to schools (from preschool up to higher secondary school or its equivalent).?

However, any service provided to an institution other than an educational institution (as defined above) is treated as a taxable service.

Services provided by the coaching centres, tuitions and private tutorials do not fall under the approved vocational education courses or approved by the government under law. Hence, they are taxable at 18% GST rate.

GST exemptions available to educational institutions?

• Income from education is wholly exempt from GST if a charitable trust is running a school, college or education institution for abandoned, orphans, homeless children, physically or mentally abused persons, prisoners or persons over the age of 65 years or above residing in a rural area.
• Government or local authority or governmental authority carrying on the activity of education is exempted from GST as this is not included in the ambit of supply of services. For Example – Government schools / Municipal schools.
• Education provided by below are also Exempted Under GST:National skill development corporation set up by the Indian governmentNational skill development corporation approved sector skill councilsNational skill development corporation approved assessment agenciesThe national skill development programs approved by NSDC Vocational skill development program approved under national skill certification and monetary reward schemeAny scheme implemented by NSDC with training partners
• 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 CATFellowship programs in Management5 Year Integrated Programs in management studies (but excludes the Executive Development Program).
• Should educational institutions be registered under GST?
• Where the educational institution is providing only education as a service then such fees are chargeable at NIL rate and such educational institutions are not required to be registered.Where educational institutions are also providing other supplies or other services, i.e., providing books to students, providing shoes or uniforms etc to students then in such cases such institutions are liable to get themselves registered.
• Applicability of GST on higher educational institutions
• Services provided to higher educational institutions are taxable and hence, the ‘input’ or supply of services such as transportation, catering, housekeeping, services relating to admission or conduct of examination to higher educational institutions will bear GST levy. This will have to be borne by the higher educational institution.
• Applicability of GST on training programs, camps, yoga programs and other events
• Training programs, camps, yoga programs and other events would be considered a commercial activity, liable for GST.
• Whether books or stationery distributed to students covered under GST?
• Supply of books is exempt under GST. However, uniform, stationery, and other non-academic related supplies are taxable under GST. Supplies provided by third parties like the musical instrument, computers, sports equipment and after-school activities offered directly by third parties are also taxable.?To know about the taxability of food and accommodation service by educational institutions and coaching centres.
• Chargeability of GST on private coaching centres and distance education
• Private institutions and coaching centres do not have any specific curriculum and do not conduct any examination or award any qualification. Hence taxable at the GST rate of 18%.Distance Education is taken up generally for higher education and hence taxable at the GST rate of 18%.
• GST impact on the education sector
• The importance of education in India can’t be undermined due to the majority of the population below 25 years of age. Due to the large population and poverty, Education should easily be available at less cost. Implementation of GST has led to rise in the cost of higher education and Distance Education. When schools were considered and exempted from GST, the government had to give the same consideration to HEIs as well, which would have avoided such a?situation.
• Classification and GST Rates on education services

Service Type Description GST Rates GST Exemption

School education Pre-school, primary, secondary Exempt Yes

Higher education services Colleges, university 18% No

Professional coaching Skill development courses 18% No

E-learning Exam Preparations, private tuitions 18% No

Vocational training Online courses, digital education 18% No?