Goods and Services Tax will not Affect Education Sector

After so many chaos and confusion Goods and Services Tax (GST) Regime has been implemented across the country on 1st July. Finance Ministry on Friday has cleared that the education sector will not be affected by the implementation of this new regime and no tax will be levied on the educational services.

As per the Finance Ministry statement, the schooling up to higher secondary and most of the services granted to the educational institutions are exempted from taxes under this new tax regime.

“There is no change made on any subject relating to education in the GST era, except to reduce the tax rate on certain items of education such as school bags etc,” an official finance ministry statement on the educational system.

Altogether, the services such as mid- day meal scheme, security, cleaning, and housekeeping, provided by educational institutions up to higher secondary are exempted from GST. Also, the statement said that the examination and admission related services up to higher secondary are exempted in this new indirect tax regime. The rumors around the corners that the education sector will become expensive under GST, have also been clarified with the Finance Ministry statements on the education sector.

Recommended: GST Notifications on Tax and Rate

Transportation services and other services provided by educational institutions, to students, staff and faculty are exempt from GST. Catering services such as mid-day meal scheme provided by the Central Government, State Government or Union Territory to educational institutions providing education up to higher secondary school or equivalent, are exempted from GST.

As per the statement, “Thus, education up to Higher Secondary School level does not suffer GST on output services and also on most of the important input services. Some of the input services like transport, canteen etc provided by private players to educational institutions were subject to service tax in pre-GST era and the same is continued in GST regime.”

Non- profitable organisations or charitable trusts which are registered under section 12AA of the Income Tax Act are exempted in the new regime. Fundamentally, these are the organisations which works on advancement of educational programmes or skill development to physically or mentally retired people, abused, orphaned, homeless children and traumatised persons.

It is anticipated that the education cost for the certification course would increase,  only primary educational institutions are entitled to avail input tax credit in the new regime. As per the laws, any institution providing education above higher secondary is not entitled to avail input tax credit.

As per the Finance Ministry statement, the schooling up to higher secondary and most of the services granted to the educational institutions are exempted under GST.