Taxation of Education Sector under GST Regime

Education is a social activity which involves facilitation of  learning, or the acquisition of knowledge, skills, values, beliefs, and habits. As per Apex Court decision in “Loka Shikshana Trust v/s CIT”, education has been defined as the process of training and developing knowledge, skill and character of students by normal schooling. It is the basic need of every child. It has been considered as a fundamental right by the constitution of this country. The 86^th Amendment, 2002 of the constitution inserted Article 21 A, “to provide free and compulsory education of all children in the age group of six to fourteen years as a Fundamental Right in such a manner as the State may, by law, determine.”

GSTR-1: Points to note before filing GSTR1

Taxing the Education Sector is a sensitive issue. As to promote education in India, it is beneficial if educational services are exempted from tax. However, in the past many decades, people commercialize education sector. People consider it as a business activity, a source of generating huge revenue. According to the GST Act, Educational Institution means an institution providing services by way of

• Pre-primary,
• primary,
• secondary,
• higher,
• specialized and
• other educational & support services.

Sale of Old Used Car

The GST Act tries to maintain a balance. Core educational services provided and received by educational institutions are exempt. Other services are sought to be taxed at the standard rate of 18%. Following are the rates applicable as per the type of service offered-

Calculate your GST amount

Apart from the above mentioned services, there are educational services that are provided by the charitable trusts that are exempted from tax under Section 12AA of the Income Tax Act. Therefore, if trusts are running schools, colleges or any other educational institutions for providing educational programmes specifically for abandoned, orphans, homeless children, physically or mentally abused persons, prisoners or persons over age of 65 years residing in a rural area, such activities will be considered as charitable and income from such services will be wholly exempt from GST.

FAQs on Composition Scheme

Also there are certain services that are coupled with other services like Boarding schools provide service of education along with other services like providing dwelling units for residence and food. In such cases, if the charges for education and boarding are inseparable, their taxability will be determined as per Section 2(30) read with section 8 of the CGST Act, 2017.

If such services in the case of boarding schools are naturally bundled and supplied in the ordinary course of business. Then the bundle of services will be treated as consisting entirely of the principal supply, which means the service which forms the predominant element of such a bundle. In such cases, the predominant nature is determined by the service of education, the other service of providing residential dwelling will not be considered for the purpose of determining the tax liability and in this case the entire consideration for the supply will be exempt.

Check the GST calendar

Thus, knowing for a fact that education is the basic fundamental right of every child and it forms the basic building block of economic and social development of a country, every attempt has been made by the GST Act to keep core educational services exempt from tax. Other auxiliary education services have been kept under different rates, but overall government has tried to ensure that education remains affordable to every person of this country.

The author of above article is Tanuja Puri, Assistant Professor.

You can also submit your article by sending a mail to [email protected] or whatsapp us at 7024984925.

Disclaimer: The views expressed in the answers of GST forum queries are strictly personal. Contents of GST forum are solely for informational purpose, not for any professional advice or suggestion. Author does not accept any liabilities for any loss or damage of any kind arising out of information and for any actions taken in reliance thereon.
You agree that www.finnbuzz.com has no liability, obligation or responsibility for any such correspondence, purchase or promotion between you and any such third party.