CBIC: Composite Supply Falls Under 18% GST for Institutes

A coaching institute shall not deposit the GST on the specific items on the grounds of the supply of the notebooks, t-shirts, bags, sweatshirts, and others to students as well as the coaching service mentioned by the Central Board of indirect taxes and custom (CBIC).

“These types of bundled services fall under the category of ‘Composite Supply’ and attract 18 per cent GST,” stated CBIC Chairman Vivek Johri in a weekly communication to the officers and staff of the indirect tax body.

The composite supply pointed towards the supply made via taxable individual to a recipient that comprises of two or exceeding supplies of goods or services or combination.

The same observations have been performed post to the Alwar (Rajasthan) CGST Commissionerate detected a modus operandi concerning the short payment of GST on the composite supply of commercial training or coaching services as well as with the goods like school bags, notebooks, t-shirts, sweatshirts, umbrellas, and others to their students.

A lump-sum amount was being levied for the goods or service the tax was deposited on each bag supply, notebooks, and others.

For the taxes furnished cases on the specific item a 12% GST will be applicable on notebooks, a 5% GST will be imposed on the t-shirts and sweatshirts when the maximum retail price is less than Rs 1,000 and 12% when the maximum retail price is above Rs 1,000.

GST Impact on the Indian Students

Tax expert mentioned that the present GST laws impose every commercial training and coaching institute to levy 18 % tax on books, course materials, and bags, irrespectively.

The tax expert mentioned that when the specific item is integrated in the system of provision of the service then it is said to be the composite supply and all the goods or services will be levied with the subjected GST to the main supply.

Thus, “the attempt to bifurcate it into different items may not be tenable. However, a mixed supply is treated differently wherein the goods/services could be sold together only due to convenience or requirement of the client but are not sold together customarily, he added.”