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Taxation Of Educational Institutions under GST

Updated on: Jan 12th, 2022 - 11:39:21 AM

8 min read

CONTENTS [ Show ]

Educational institutions provide noble service of educating children for a better

future. GST on certain services provided by the educational institutions is exempt
or not taxable. The article provides detailed information on this aspect.

What were pre-GST laws laid down for Educational

Institutions

Services provided by an educational institution to its students or faculty or staff

were exempt. (Mega Exemption -Notification Number ST-25/2012 dated 20th June

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2012)

Later the exemption in relation to services provided to educational institutions was

modified with effect from 1st April 2014 and scope of the exemption for services
provided to the Educational Institutions (Institution providing pre-school education
and education up to higher secondary school or equivalent) was restricted to
some specified services namely-

Transportation of students, faculty and staff

Catering, including any mid-day meals scheme sponsored by the

Government;

Security services performed in such educational institution

Cleaning services performed in such educational institution

House-keeping services performed in such educational institution

Services relating to admission to, or conduct of examination by, such

institution

Any other service provided apart from those mentioned above to educational
institutions (Institution providing pre-school education and education up to higher
secondary school or equivalent) was taxable Also, any service provided to an
institution other than Institution providing pre-school education and education up
to higher secondary school or equivalent was taxable.

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 recognized

by any law for the time being in force;
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2/16/23, 10:36 AM Taxation Of Educational Institutions under GST

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.

However, any service provided to an educational institution other than an

institution providing services by way of pre-school education and education up to
higher secondary school or equivalent 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.

Exemptions available to 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

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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 government

National skill development corporation approved sector skill councils

National skill development corporation approved assessment agencies

The national skill development programs approved by NSDC Vocational

skill development program approved under national skill certification
and monetary reward scheme

Any 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
CAT

Fellowship programs in Management

5 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

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2/16/23, 10:36 AM Taxation Of Educational Institutions under GST

Services provided to higher educational institutions are taxable. 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).

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, read our article on GST on food and
accommodation service.

Chargeability of GST on Private Coaching centres and

Distance Education

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2/16/23, 10:36 AM Taxation Of Educational Institutions under GST

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%.

For example, M/s Shambhavi Tutorials provides class 11th and 12th tuitions for
subjects such as Maths, Physics, Biology and Chemistry, including JEE exams. A
student enrolls in their Class 12th programme plus JEE coaching for which the
billing is as follows:

Tuition fee: Rs.48,450

Books: Rs.20,560

Maintenance fee: Rs.5,000

Total Value of Invoice (before tax): Rs.74,010

Taxable value = Rs.53,450 (Rs.48,450 + Rs.5,000)

CGST: Rs.4,811

SGST: Rs.4,811

Total GST charged: Rs.9,622

Total payable: Rs.83,632 (Rs.74,010 + Rs.9,622)

The private tutors and coaching centres must file GST returns like any other
taxpayer in GSTR-1 and GSTR-3B either monthly or quarterly, depending upon
turnover and whether or not they opt into the QRMP scheme. If they have opted
into the composition scheme for service providers, then they must pay tax in CMP-
08 and file GSTR-4 once in a year.

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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.

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