Education Services by a trust, society or Section 8 company registered under section 12AA of the Income-tax Act, 1961 (43 of 1961) by way of charitable activities are exempted from GST.
However, what qualifies as 'education' or 'educational institution'?
What is 'vocational education' or 'auxiliary education services'?
Read to learn more about what is exempt and what is not!
What is Education?
- Education is a process involving training and developing knowledge, skill and character of students by way of normal schooling.
- GST Act is attempting to strike 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 exemption would be taxed at a standard rate of 18% with full admissibility of Input Tax Credit (ITC) for such taxable services in cases where the output service is not exempt.
· However, to reiterate, 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 and thus GST
must be paid by the supplier of services, though charged to the receiver of the
service. In other words the onus of compliance is on the provider of education
services.
What is Educational Institution?
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
As
per Notification No. 12 CTR dated
28th July 2017, an “approved vocational education course”
means:
(i) A course run by an industrial training institute or an
industrial training center 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
(ii) 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.
In light of the above, conducting degree courses by colleges,
universities or institutions which lead to grant of qualifications recognized by
law would be exempt under GST.
However, 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.
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:
- Pre-primary education services
- Primary education services
- Secondary Education Services
- Higher education services
- Specialised education services
- Other education & training services
and educational support services
GST Rates for education
sector are mentioned in:
- Notification
No. 11/2017-Central Tax (Rate) dated 28.06.2017 and
- Notification
No. 12/2017-Central Tax (Rate) dated 28.06.2017
|
Chapter/
Section/Heading
|
Description
of Service
|
Rate
/ Notification
|
|
9992
|
Education Services
|
18% as per serial no 30 of notification
no. 11 CTR dated 28thJuly 2017
|
|
9992
|
Services provided –
(a) by an
educational institution to its students, faculty and staff;
(b) to an
educational institution, by way of, –
(i) transportation of students, faculty and staff;
(ii) catering, including any 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 relating to admission to, or conduct
of examination by, such institution; up to higher secondary:
Provided that nothing
contained in entry (b) shall apply 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
|
NIL as
per serial no 66 of notification no. 12 CTR dated 28th July
2017
|
|
9992
|
Services provided by
the Indian Institutes of Management, as per the guidelines of the Central
Government, to their students, by way of the following educational
programmes, except
Executive Development Programme: –
(a) two year full time Post Graduate Programmes in
Management for the Post Graduate Diploma in Management, to which admissions
are made on the basis of Common Admission Test (CAT) conducted by the Indian
Institute of Management;
(b) fellow programme in Management;
(c) five year integrated programme in Management.
|
NIL as
per serial no 67 of notification no. 12 CTR dated 28th July 2017
|
|
90 or any Chapter
|
Technical aids for
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 specifically adapted for use
of the blind Braille instruments, paper etc.
|
5% as per serial No. 257 of Schedule I of the Notification
No. 1 CTR dated 28th June, 2017
|
|
9023
|
Instruments, apparatus
and models, designed for demonstrational purposes (for example, in education
or exhibitions), unsuitable for other uses
|
28% as per serial No.
191 of Schedule IV of the Notification
No. 1 CTR dated 28th June, 2017
|
- Hence, 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 also fully exempt from GST.
- Annual subscription/fees charged as lodging/ boarding charges by such educational institutions from its students for hostel accommodation therefore, does 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.
What is '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:
(i) To a registered person, shall be the location of
such person;
(ii) To a person other than a registered person,
shall be the place where the event is actually held and
(iii) 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 Government of India too has issued a
detailed note with regard to GST on Education Services.
To read the note, please click on the
following link:
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