GST on Educational Services

GST is an indirect tax levied on all goods and services in India. With the Government aiming to foster education to every child, essential educational services have been kept out of the ambit of GST. However, certain educational courses and training programmes attract GST. Hence, the applicability of GST would depend on the type of course and its provider. In this article, we look at GST on educational services in detail.

GST Rate on Education Services

The SAC code and 1 for educational services are as below:

Chapter/ Section/Heading	Description of Service	Rate
9992	Education Services	18%
9992	Services provided –	NIL
	(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
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.
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 the use of the blind Braille instruments, paper etc.	5%

As evidenced by above, school education, preschools to post0graduation have been exempted from GST. This will ensure that students are not taxed on payments made to educational institutions. However, some of the programmes will attract taxes under GST. These include non-conventional courses of short duration, training programmes for working people and educational events organised by a foreign-based entity. Therefore, students and professionals, enrolled in such educational programmes will probably end up spending more in terms of fees and taxes. Also read: GST on Coaching Class

Place of Supply for Educational Services

GST must be collected and remitted by the supplier of services. While levying GST, the supplier must make a distinction between interstate and intra-state supply to levy IGST or CGST and SGST. For educational services, the place of supply can be determined as follows:

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

Charitable Trust

Charitable Trusts running educational institutions are exempt from GST. Apart from the general exemption available to all educational institutions, charitable activities of entities listed under Section 12AA of the Income Tax Act is also exempt. The term charitable activity, as defined in the notification, is as follows: If a trust involves in educating orphans, homeless children, physically/mentally challenged persons, the needy etc., residing in rural areas, it would be treated as charitable and such incomes would be excluded from GST.

Composite and Mixed Supply

If utilities for education, lodging and boarding provided by the boarding schools are combined into a single structure, it is exempted from GST. If the value of education or lodging or boarding is attached, then these services are bundled, and their taxability will be determined in terms of the principles laid down. In case the fee structure is distinct for education, lodging and boarding, then such services would be evaluated separately. Since its service determines the predominant factor of education, the idea of providing residence will not be considered taxable. Know more about GST composite and mixed supply.