Educational institutions provide noble service of teaching children for a much better future. GST on certain services provided by the tutorial institutions is exempt or not taxable. The article provides detailed information on this aspect.
Services provided by an academic institution to its students or faculty or staff were exempt. (Mega Exemption -Notification no. ST-25/2012 on 20th June 2012)
Later the exemption in relevancy services provided to educational institutions was modified with effect from 1st April 2014 and the scope of the exemption for services provided to the tutorial Institutions (institutions providing pre-school education and education up to higher school or equivalent) was restricted to some specified services namely-
Transportation of scholars, faculty, and staff
Catering, including any mid-day meals scheme provided by the Government;
Security services performed in such establishment
Cleaning services performed in such institution
House-keeping services performed in such institution
Services pertaining to admission to, or procedure of examination by, such institution
Any other service provided but those mentioned above to educational institutions (Institution providing pre-school education and education up to higher Gymnasium or equivalent) was taxable Also, any service provided to an establishment apart from Institution providing pre-school education and education up to higher middle school or equivalent was taxable.
What is an academic Institution under GST?
Under GST, an “educational institution” is defined as an establishment providing services by way of:
Pre-school education and education up to higher education.
Education as a component of an approved vocational training course;
Our Educational Services evaluated as Supply and its Taxability
Taxable supply signifies a supply of products or commodities or both which is liveable to tax under GST; The following services given by an academic institution to its students, faculty, and staff or academic institution aren’t required to be taxed under GST.
Transportation of scholars, faculty, and staff; Catering, including any mid-day meals scheme sponsored by the Central Government, regime, or Union territory; Security or cleaning or house-keeping services performed in such educational organizations; Services inferring to admission to, or conduct of examination by, such institutions up to higher secondary.
However, any service provided to an academic institution aside from an establishment providing services by way of pre-school education and education up to higher equivalent is treated as a taxable service.
Services provided by the coaching centers, tuition, and personal tutorials don’t constitute the approved vocational training courses or approved by the govt. under law. Hence, they’re taxable at an 18% GST rate.
Exemptions available to Institutions
Income from education is wholly exempt from GST if a trust is running a college, 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 an exceedingly geographic area.
Government or agency or governmental authority carrying on the activity of education is exempted from GST as this is often not included within the ambit of supply of services. for instance – Government schools / Municipal schools.
Education provided below also are Exempted Under GST:
National skill development corporation founded by the Indian government
National skill development corporation approved sector skill councils
National skill development corporation approved assessment agencies
The national skill advancement policies approved by the NSDC Vocational skill development program
Any scheme implemented by NSDC with training partners
The exemption has also been given to the services provided by the IIM–
2 year full-time residential PG programs in Management for Post Graduate Diploma in Management, admission during which is granted via CAT
Fellowship programs in Management
5 Year Integrated Programs in management studies (but excludes the chief Development Program).
Should educational institutions be registered under GST?
Where the academic institution is providing only education as a service then such fees are chargeable at the NIL rate and such educational institutions aren’t required to be registered.
Where educational institutions also are 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 vulnerable to get themselves registered.
Applicability of GST on Higher Educational Institutions
Services provided to higher educational institutions are taxable. While services provided by an academic institution are out of the GST ambit, the identical isn’t the case with services provided to an academic institution.
Hence, the ‘input’ or supply of services like transportation, catering, housekeeping, services referring to admission or conduct of examination to higher educational institutions will bear GST levy. this may be borne by the upper establishment.
Applicability of GST on Training programs, camps, yoga programs and other events
Training programs, camps, outdoors programs yoga programs and l other events would be considered an advert activity, accountable for GST.
Whether books distributed to students come under GST supply of books is protected under GST. However, uniforms, stationery, and all supplies which are not academic are taxable under GST. Supplies given by third parties just like the computers, equipment, instruments, and after-school activities offered directly by 3rd parties are taxable.