Goods and Services Tax (GST), biggest tax reform since Independence has been finally implemented across the country from 1st July. On one hand, Government has exempted education sector till higher secondary in the new regime while on another hand coaching classes, certification courses, training programs have been placed in the slab rate of 18 percent. Due to the higher taxation rates in the new regime, the coaching institutes across India have enhanced the fees for the preparation of medical and engineering examinations. By the decision made by Government, it is seen that thousands of medical and engineering students have been influenced by this.
GST Impact on Coaching Classes
In Rajasthan every year nearly 2 Lakh to 3 Lakh students take admissions in the coaching classes for preparing to compete for engineering and medical examinations. Students who take admission in coaching classes generally belong from the middle class and lower middle class from semi-urban or rural areas. The fees for coaching classes come on an average of Rs 1 Lakh which is valid for 1 year. The GST rates on coaching fees have increased in the new regime i.e., from 15 percent to 18 percent. After the implementation of the goods and services tax regime from 1st July, coaching fees will impose 18 percent GST rates. Keeping in mind education sector is exempted in the new regime, the government has treated coaching classes differently and considered it luxury. Due to the new regime, it will not only enhance the coaching fees but also influenced the daily living expenses of the students.
It is known that along with Rajasthan, there are other education hubs in India at Bangalore, Mumbai Delhi Jaipur and several other major cities who host best of the institutes with higher studying facilities. These cities are also under the scanner of GST as the new tax scheme has plagiarised almost every sector with its effects not known. The government has figured out that there will issue regarding this price hike from GST and will make an adversary impact on the overall educational environment of the country.
After the implementation of the GST regime from 1st July, students will have to pay 18 percent tax rate plus Rs 1 Lakh fees, that means now the students would have to pay an additional amount of Rs 3000 every year. High tax rate of coaching fees in the new regime would enhance the financial burden on the pockets of parents. They have to pay annually Rs 1.18 Lakh under the new tax regime instead of Rs 1 Lakh for taking admission in coaching centres. The parents, as well as students, are worried about the higher tax rates of coaching fees declared by the GST Council. They have been urged to the GST Council and Prime Minister must review the 18 percent GST rates on coaching fees.
Example with Figures
Let us understand with an example of Kota, every year nearly 1.5 lakh students come for the coaching, every student pays Rs 1 Lakh fees that means the total figure of the fee is 1250 crore. As per the 18 percent tax the total figure will 225 crores whereas according to 15 percent tax rate this figure was 187 crore, that means the difference of 38 crores would have to bear by the students. In Rajasthan, coaching industry is very large and there are several coaching institutes which provide guidance to students for engineering and medical examinations.
Read Also: GST Impact on Education Sector in India
As per the Manoj Gupta, General Secretary of Coaching Institute of Association the coaching industry is approximately of 10,000 crores. Previously service tax was nearly 1500 crore and now it would be 1800 crore in the new indirect tax regime that means the difference of 300 crores will affect students. After the rollout of the new regime in the country not only enhance the fees but will also enhance the cost of living of students.
As per the CA, Udit Bhargava said that GST would also enhance prices of transportation, mess, and accommodation. The table mentioned above clear your doubts. Pre- GST and Post GST Rates of Accommodation, Conveyance and Food also mentioned below:-
| Service | Pre-GST | Post GST | Monthly Expense | Pre-GST Expense along with Tax | Post GST Expense along with Tax | Difference |
|---|---|---|---|---|---|---|
| Fees | 15% | 18% | INR 15,000 | INR 17,250 | INR 17,700 | INR +450 |
| Food | 20.50% | 5% | INR 5,000 | INR 6,025 | INR 5,250 | INR -775 |
| Lodging | 15% | 18% | INR 10,000 | INR 11,500 | INR 11,800 | INR +300 |
| Conveyance | 6 | 5 | INR 3,000 | INR 3,180 | INR 3,150 | INR -30 |
- Non- AC Restaurant levies 5% tax
- AC Restaurant Levies 5% tax
- Under the previous regime, it was imposed 14.50% VAT plus 6% tax and additionally it was more than 20%
- It is anticipated that the food prices will fall in the new regime but the food provided by big hostels will costlier
- Similarly, small hostels and flats are exempted in the new regime but the accommodation provided by branded hostels, campus and PG will impose 18% tax
- The prices of conveyance will fall down from 6 percent to 5 percent
Read Also: Are Restaurants Charging Correct GST Bills? Know and Save Money
Ashish Gupta, Managing Director of Bansal Classes said that due to this may be un-organized sector improve. Apart from these, the number of repeater batch students may decline.
CR Choudhary, Senior Vice President of Allen Kota said that, In this situation, the financial burden would fall on the shoulders of parents and students. Generally, students who take admission in the coaching classes hails from semi-urban and rural areas as well as belongs from the middle class and lower class families.
Punjab University Hostel to Increase GST Burden on Hostel
The Punjab University is all set to apply 5 percent GST on the hostel mess food being served to the students across the university premises. The university had recently got a communication regarding the applicability of GST on hostel mess at 5 percent.
After the implementation of GST on the hostel mess, it is expected that the overall monthly food bill per student may rise up to 300 rupees on an average. As currently, one meal of the hostel mess costs around 30 rupees and after applying 5 percent GST, there would be an approximate 300 rupees extra burden to come underway at the end of the month on every student.
Earlier the council and university panels discussed regarding the GST applicability in various other services of the university and had concluded to apply some aspects with GST to procure some security of revenue in the field.
Coaching Fees Included Under The GST
Protest Against GST on Hostel Mess
A silent protest has been shown by the Students for Society (SFS) as there is a submission of memorandum against the applicability of the GST on canteen and mess bills including the issue related to the salaries being pending of workers which are based on the hostel funds.
The finance ministry has cleared the fact that the mess and canteen bills will be applicable to the GST whether it is being served by the institution or contractor.
As opposed to the earlier statement where the union finance minister said that the services provided by an educational institution to its students, faculty and staff are fully exempted from the GST.
The SFS spokesperson Harmandeep mentioned that “This step by the Central Government will impact a large number of students who have been worst hit by inflation, fee hike, unemployment, seat cuts and irregularity in the disbursement of fellowships and even scrapping of fellowships. It has affected a large number of students who are forced to discontinue their studies. Now, the GST will aggravate the situation further.”
I run a coaching institute at Zirakpur, Mohali, Punjab. I started the institute in April 2018 and my annual turnover will be approx Rs.6.00 Lacs. I have already registered the institute under GST. Do I need to file the return on monthly basis?
Sir,
I run a small private coaching centre for school children with an annual turnover of nearly 7 lacs. Do I need to be registered for GST?
As you are below the threshold limit, you do not need to register under GST.
What will be the nature of supply when a Haryana based student comes to Chandigarh for coaching classes. What tax will be levied by coaching center in Chandigarh to that center. Whether it will be a Inter state supply or Intra-state supply?
If services are provided in Chandigarh only by the coaching institute then cgst and sgst will be applicable. That would be intrastate supply since place of supply is Chandigarh only.
Mohammad alam khan i like gst rule in India