Goods and Service Tax on Education Services

Introduction: This article discusses in details GST taxability on education sector.

Education is the process of training and developing knowledge, skill and character of students by normal schooling.

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%.

Auxiliary services received by such educational institutions for the purpose of education up to Higher Secondary level is also exempt from GST

Other services related to education, not covered by the exemption would be taxed at a standard rate of 18% with full admissibility of ITC for such taxable services in cases where the output service is not exempt.

However, Services by an entity registered under section 12AA of the Income-tax Act, 1961 (43 of 1961) by way of charitable activities are exempted from GST.

Education Services are covered under forward charge. Therefore, GST shall be paid by the supplier of services.

Educational Institution means an institution providing services by way of:

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

'Educational institution' means:

1. institutions providing services by way of education as a part of curriculum for obtaining a qualification recognized by any law for the time being in force.
2. institutions providing services by way of education as a part of approved vocational course

As per notification no. 12 CTR dated 28th July 2017, an 'approved vocational education course' means, -

1. 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
2. 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.

So in view of the above,

1. Conduct of degree courses by colleges, universities or institutions which lead grant of qualifications recognized by law would be exempted from GST.
2. Training given by private coaching institutes or other unrecognized institution or self styled educational institution would not be exempted as such training does not lead to grant of a recognized qualification.
3. 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 are also not exempted because the course / degree not recognized by Indian Law.

Education Services are classified in heading 9992 and are further sub-divided into six groups comprising of

1. Pre-primary education services
2. Primary education services
3. Secondary Education Services
4. Higher education services
5. Specialized education services
6. Other education & training services and educational support services

Rates of GST in education sector

GST Rates for education sector are mentioned in:

1. Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 and
2. Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017

So, services provided by an educational institution to students, faculty and staff are exempt.

The output services of lodging/boarding in hostels provided by such educational institutions which are providing pre-school education and education up to higher secondary school or equivalent or education leading to a qualification recognized by law, are fully exempt from GST.

Annual subscription/fees charged as lodging/ boarding charges by such educational institutions from its students for hostel accommodation shall therefore, not attract GST.

Input services like canteen, repairs and maintenance etc. provided by private players to educational institutions are subject to GST.

As output services are exempted, the Educational institutions may not be able to avail credit of tax paid on the input side.

Auxiliary education services entry no 66 of notification no. 12, if provided to educational institutions providing degree or higher education, the same would not be exempt from GST.

The supply of placement services provided to educational institutions for securing job placements for the students shall be liable to GST.

Educational institutes such as IITs, IIMs charge a fee from prospective employers like corporate houses/ MNCs, who come to the institutes for recruiting candidates through campus interviews in relation to campus recruitments. Such services shall also be liable to GST.

Place of Supply in education sector where BOTH the location of supplier of services and the location of the recipient of services is in India

As per section 12(6) of the IGST Act, 2017, the place of supply of services provided by way of admission to an educational or any other place and services ancillary thereto, shall be the place where the event is actually held or such other place is located.

As per section 12(7) of the IGST Act, 2017, the place of supply of services provided by way of, -

(a) organization of a cultural, artistic, sporting, scientific, educational or entertainment event including supply of services in relation to a conference, fair, exhibition, celebration or similar events; or

(b) services ancillary to organization of any of the events or services referred to in clause (a), or assigning of sponsorship to such events: –

1. To a registered person, shall be the location of such person;
2. To a person other than a registered person, shall be the place where the event is actually held and
3. if the event is held outside India, the place of supply shall be the location of the recipient.

Place of supply of Educational Services where the location of the supplier of services or the location of the recipient of services is outside India

The place of supply will be the place where the event is actually held.

Composite and Mixed Supply in Education sector

• If in Boarding schools, charges for education and lodging and boarding are inseparable then it exempt from GST.
• Provision of dual qualifications is in the nature of two separate services as the curriculum and fees for each of such qualifications are prescribed separately. Service in respect of each qualification would, therefore, be assessed separately.

The author is a practicing CA based in Delhi and is registered Insolvency Professional. He can be reached at cavinodchaurasia@gmail.com

Disclaimer: The views expressed in this article are strictly personal. The content of this document are solely for informational purpose. It doesn't constitute professional advice or recommendation. The Author does not accept any liabilities for any loss or damage of any kind arising out of information in this article and for any actions taken in reliance thereon.