GST

GST on Education Services -A Complete Analysis

Education is considered as a base for the economic development of a nation. The quality of human resource in any country depends on the efficiency of its education system. Taxing the educational sector always remains a sensitive issue as education is considered more as a social activity than a business. The Government also has a constitutional obligation to provide free and compulsory elementary education to every child. Hence, to promote education, tax exemption for educational services will be beneficial. Education like all other services is an economic activity. Therefore educational institutions fall under the scope of GST. GST provisions for educational institutions in India are clearly defined. The GST Act tries to maintain a delicate balance whereby the core educational services provided and received by the educational institutions are exempt, and other services are taxed at the standard rate of 18%.

What is the Classification of Educational Services under GST law?

As per Notification No.11/2017^[1] in the Central Tax Rate, educational services are classified in Heading 9992. It is further sub-divided into six groups which comprise of:

What is the Rate of GST on Educational Services?

The rates of the GST on education services as per Notification No. 11/2017 of the Central Tax (Rate), Notification No. 11/2017-Central Tax (Rate) and Notification No. 12/2017-Central Tax (Rate) all dated on 28.06.2017 are as below:

Heading	Description of Service	Rate of Interest
9992	Education Services	18% ( 9%  of Central Tax + 9% of State Tax)
9992	Services provided by   (a) by an educational institution to all its students, faculty and staff (b) to an educational institution, by way of  – (i) transportation of students, faculty and staff  (ii) catering, including the mid-day meals scheme sponsored by the Central Government, State Government or Union territory; (iii) security or cleaning or housekeeping services performed in such educational institution  (iv) services related to admission to, or conduct of examination by, such institution; up to higher secondary (b) shall apply to any educational institution other than an institution providing educational services by way of pre-school education and education up to higher secondary school or equivalent.	NIL
9992	The Services provided by the Indian Institute of Management or IIM, , to their students, by way of  following educational programmes, except for: Executive Development Programme and a two-year full-time PGDM or Post Graduate Programmes in Management on which admissions are made based on Common Admission Test or CAT.	NIL
90 or any chapter	Technical aids for all education, rehabilitation,  vocational training and employment of the blind such as Braille typewriters, Braille watches, teaching and learning aids, games and other instruments and vocational aids specially adapted for the use of the blind Braille instruments, paper etc.	5%
9023	Instruments, apparatus and the models, designed for demonstration purposes (for example, in education or exhibitions), which is not suitable for other uses.	28 %

What is the Meaning of Educational Institution in GST?

Educational institutions in GST mean an institution providing services by way of:

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

Education as a part of a curriculum to obtain a qualification recognised by law 

The educational services which are in the negative list, related to the delivery of education as a part of the curriculum prescribed for obtaining an education by law. It is necessary to understand that to be in the negative list service must be delivered as part of the curriculum. This concept covers the conduct of degree courses by colleges, universities or institutions which lead to the grant of qualifications recognised by law. Training provided by private coaching institutes are not covered under this as such training does not lead to the grant of a recognized qualification. The services provided by the law of a foreign country are not covered in this negative list.

An approved vocational course in educational services

The vocational course as prescribed under the approved vocational course are as follows:

• A course run by industrial training institute or an industrial training centre which is 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).
• Any modular employable Skill Course which is approved by the National Council of Vocational Training and run by a person registered with the Directorate General of Training, Ministry of Skill Development.

Are Educational Services considered as Supply under GST Law?

According to Section 7(1)(a), the term ‘supply’ is of vast extent and to constitute supply under this section; the following conditions must be fulfilled:

1. All forms of supply are included.
2. Specific types of supply are enumerated such as sale, transfer, barter, exchange, licence, rental, lease or disposal.
3. The supply must be for a consideration
4. A person must do the supply
5. The supply should be during or furtherance of business.

Thus, any educational institution which provides services to any person for consideration in the course of business or furtherance of business shall constitute supply.

A taxable supply means the supply of goods or services or both levies to tax under GST.

The following services by an educational institution are not taxed under the GST:

1. Transportation of students, faculty and staff.

2. Catering services, which includes any mid-day meal scheme sponsored by the Central Government, State Government or the Union territory.

3. Security, cleaning or housekeeping services performed in an educational institution.

4. Services relating to admission, the conduct of examination by such an institution up to higher secondary.

5. Except for any services provided to an educational institution other than the institution providing services by way of pre-school education and education up to higher secondary school or equivalent is treated as a taxable service.

6. The supplier of services must pay GST as it is covered under forwarding charge.

Place of Supply for Educational Services for collection of GST

According to section 13(5) of the IGST Act, 2017, the place of supply of services supplied by way of admission to, organisation of a cultural, artistic, sporting, scientific, educational, entertainment event, celebration, conference, fair, exhibition or similar type of events, and the services ancillary to such admission or organisation, shall be the place where event is held.

GST is collected and remitted by the supplier of services. The supplier while levying GST must make a distinction between the inter-state supply and intrastate supply to apply IGST, CGST and SGST. For Educational services, the place of supply is determined as follows:

• If the supply is provided to a person having GST registration, the place of supply will be the location of such person.
• If the supply is provided to a person other than a registered person, then the place of supply is where the event is held.

Exempted Educational Services under GST

The educational services exempted under the GST law are:

• Assessment and examination fees
• Curriculum related or course materials,
• Excursion and field trips associated with the course of study or part of curriculum requirement,
• Printing of academic transcripts,
• Issuing or replacement of student cards,
• The educational services provided by the Assessment agencies approved by the Sector Skill Council or the National Skill Development Corporation
• National Skill Development Corporation which is set up by the Government of India,
• Sector Skill Councils approved by the National Skill Development Corporation,
• Training partners supported by the National Skill Development Corporation or the Sector Skill Council.

Non-Exempted Educational Services under GST

The educational services not exempted from GST are after school activities supplied by third parties, food and accommodation supplies for an excursion, supplies made by third parties like a musical instrument, computers, sports equipment, and uniform, stationery, and other non-academic related supplies.

The educational services led by training and coaching foundations are also not exempted from GST. Let’s have a look at them the non exempted educational services:

• Higher Education Institutions and Private Institutions
• Coaching Institutes
• Cost of Organising Events- When foreign entities organise any educational or training events in India attended by professionals, individuals and overseas participants will be taxed under GST.

Are Educational Institution run by charitable organisations liable for GST?

Charitable Trusts running institutions Which confirm the definition of Educational Institution IS entitled to get the exemptions. Other than the general exception available to all educational institutions, the Income-tax Act exempts charitable activities of institutions registered under Section 12AA. Hence, if trusts are running schools, colleges or any other educational institutions or performing activities related to the advancement of educational programmes specifically for abandoned, orphans, homeless children, physically or mentally abused persons, prisoners or persons over the age of 65 years residing in a rural area. These activities will be considered as charitable, and the income from such services will be wholly exempt from GST in terms of Notification No.12/2017- Central Tax (Rate) dated 28th June 2017.

Composite and Mixed Supply in Educational Services under GST

• If in Boarding schools the charges for education, lodging and boarding are inseparable then it exempt from GST.
• The provision of dual qualifications here is like two separate services as the curriculum and fees for each of such qualifications are prescribed separately. Service in respect of each qualification is assessed independently.

Conclusion

The educational institution must pay the Goods and Services Tax or GST to initiate an educational service in India. Right to education is the fundamental right of every child in India. GST Law recognises this aspect and provides an exemption to the educational institutions, giving education up to higher secondary school or equivalent, from the burden of GST. Other services related to education which is not covered under the exemption, are taxed at a standard rate of 18%. In brief, it can be said that the Government has made every attempt to ensure that the core educational services are fully exempt from GST.

Also, Read: Power of Tax Authorities to conduct Special Audit under GST