The term ‘education’ is not defined under GST. However, the generalized meaning of the term ‘education’ means that it is a process of training and developing the skills, knowledge and character of the student through normal schooling.
As ‘education’ is viewed more as a social activity rather than commercial, the levy of taxation on the Education Sector becomes a very sensitive issue. However, it cannot be denied that, since long, more and more private players are entering into the Education Sector. Resultantly, it can be said that the ‘Education Sector is now an organized sector which involves huge revenues’.
Taking note of commercialization, together with social sentiments, exemption is provided to core educational services, whereas, other services are taxed at standard GST rate.
The present article tries to explain the term ‘Educational Institution’ as per GST law; the pre-GST law laid down for Educational Institutions; the classification of GST on Education Services; taxability and exemption available under GST on Education Services; exemptions available to Educational Institutions under GST; chargeability of GST on Private Coaching Centres and chargeability of GST on Distance Education.
What is an Educational Institution under GST
Notification no. 12/2017-Central Tax (Rate) dated 28th June 2017 defines the term ‘Educational Institution’. Accordingly, it simply means an institution engaged in providing services by way of
- Pre-school education;
- Education up to higher secondary school/ equivalent;
- Education as part of the curriculum in order to obtain a qualification recognized by any law for the time being in force;
- Education as part of an approved vocational education course.
Pre-GST laws laid down for Educational Institutions?
Broadly speaking, the scenario pre-GST and post GST relating to tax implications on Educational Institutions is by and large the same. Pre-GST the tax implications on Educational Institutions are briefed hereunder –
- Services provided by an Educational Institution to its faculty, staff and students is exempt from tax.
- Following services provided to an Educational Institution is exempt from tax
Implications of GST on Service Industry | OIDAR Services in GST | GST on Construction Industry
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What is the classification of GST on Education Services?
GST on Education Services is classified under Heading 9992. The classification of GST on Education Services along with the six-digit HSN code is tabulated hereunder for ready reference
Six-digit HSN code | Description |
|---|---|
999210 | Pre-primary Education Services |
999220 | Primary Education Services |
999231 | Secondary Education Services (General) |
999232 | Secondary Education Services (technical and vocational) |
999241 | Higher Education Services (General) |
999242 | Higher Education Services (technical) |
999243 | Higher Education Services (vocational) |
999249 | Other Higher Education Services |
999259 | Specialized Education Services |
999291 | Cultural Education Services |
999292 | Sports and recreation education services |
999293 | Commercial Training and Coaching Services |
999294 | Other Education and Training Services |
999295 | Services relating to the conduct of examinations for admission to Educational Institutions |
999299 | Other Educational Support Services |
What is the gist of taxability and exemption available under GST on Education Services?
The following table provides the gist of taxability as well as exemption available under GST on Education Services
Heading | Description of Services | Rate (along with relevant notification) |
|---|---|---|
9992 | Education Services | Total 18% [9% CGST + 9% SGST] [Notification no. 11/2017- Central Tax (Rate) dated 28th June 2017] |
9992 | Services provided by – (a) An educational institution to its faculty, staff and students; (aa) An educational institution relating to the conduct of entrance examination against consideration in the form of an entrance fee. Service provided to – (b) An educational institution by way of – (i) Transportation of faculty, staff and students; (ii) Catering (which includes any mid-day meals scheme being sponsored by the Central/ State Government or Union Territory); (iii) Security or house keeping or cleaning services being performed in an Educational Institution; (iv) Services relating to admission to or conduct of examination by such institution; (v) Supply of online educational journals/ periodicals. [notably, the above entry also covers two proviso as covered vide notification no. 12/2017-Central Tax (Rate) dated 28th June 2017] | NIL [Notification no. 12/2017- Central Tax (Rate) dated 28th June 2017] |
9992 | Services provided (as per the guidelines of the Central Government) by the Indian Institutes of Management to their students by way of following educational programmes (except the Executive Development Programme) – Two year full time Post Graduate Programmes in Management (for the post of Graduate Diploma in Management), wherein, admission is made based on the CAT (i.e. Common Admission Test) conducted by the Indian Institutes of Management; Five year integrated programme in Management; Fellow programme in Management. | NIL [Notification no. 12/2017- Central Tax (Rate) dated 28th June 2017] |
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What are exemptions available to Educational Institutions under GST?
Basic exemption made available to Educational Institutions under GST is covered vide entry no. 66 of notification no. 12/2017- Central Tax (Rate) dated 28th June 2017. Notably, the entry provides an exemption to both i.e. –
- Services provided by the Educational Institutions (wherein, Educational Institution is the service provider); and
- Services provided to the Educational Institutions (wherein, Educational Institution is the service receiver).
The said exemption provided vide entry no. 66 of notification no. 12/2017- Central Tax (Rate) dated 28th June 2017 is explained hereunder
List of exemptions to services provided by an Educational Institution
- Services provided by an Educational Institution to its faculty, staff and students;
- Services provided by an Educational Institution by way of conduct of entrance examination against consideration in the form of the entrance fee.
List of exemptions to services provided to an Educational Institution
1. Following services provided to an Educational Institution providing services by way of preschool education and education up to higher secondary school/ equivalent
- Transportation of faculty, staff and students
- Catering (which includes any mid-day meals scheme being sponsored by the Central/ State Government or Union Territory);
- Security or house keeping or cleaning services being performed in an Educational Institution.
Notably, the above services will not be exempt if the same is provided to universities or colleges or other educational institutions.
2. Following service provided to an Educational Institution [other than an institution providing services by way of preschool education and education up to higher secondary school/ equivalent or institution providing education as a part of an approved vocational education course]
- Supply of online educational journals/ periodicals.
3. Following service provided to an Educational Institution
- Services relating to admission to or conduct of examination by such institution.
What is the chargeability of GST on Private Coaching Centres?
There is no exemption available to Private Coaching Centres under GST. Accordingly, GST @ 18% (i.e. 9% CGST + 9% SGST or 18% IGST) is chargeable on Private Coaching Centres.
What is the chargeability of GST on Distance Education?
There is no exemption available to Distance Education under GST. Accordingly, GST @ 18% (i.e. 9% CGST + 9% SGST or 18% IGST) is chargeable on Distance Education.
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