Impact of GST on Educational Institutions

1. What is an educational institution under GST law?

• Educational institution is defined as an institution providing services by way of:
  • Pre-school education and education up to higher secondary school or equivalent;
  • Education as a part of a curriculum for obtaining a qualification recognized by any law for the time being in force.
  • Education as a part of an approved vocational education course.

2. What do you mean by the term “education as a part of a curriculum for obtaining a qualification recognized by any law”?

• Education as a part of a curriculum for obtaining a qualification recognized by any law can be defined as formal education offered by a college, university or institution  for obtaining any qualification recognised by any Indian law for the time being in force.
• Note: any qualification recognised by any law of a foreign country is not covered under this exemption.

3. What is meant by an approved vocational educational course?

An approved vocational educational course means

• A course run by an Industrial Training Institute(ITI) or an Industrial Training Centre(ITC) affiliated to National Council for Vocational Training(NCVT) or State Council for Vocational Training(SCVT) offering courses in designated trades notified under the Apprentices Act, 1961, or
• A Modular Employable Skill Course, approved by the NCVT, run by a person registered with the Directorate General of Training, Ministry of Skill Development and Entrepreneurship.
  • A modular employable skill course (MES) is a course that provides training and employable skills to early school dropouts, existing workers etc. to improve their degree of employability.

4. What are the circumstances where services provided by educational institutions do not attract GST?

• Services provided by the educational institutions to its students, staff and faculty are exempted from GST.
• It has to be noted that the exemption is available only in respect of services provided by an educational institution and not for supply of goods by an educational institution to its student, staff and faculty. (Refer FAQ no 16)

5. Are services provided to a higher secondary school exempted from GST?

• The following services provided to a higher secondary school are exempt from GST
  • Transportation of students, staff and faculty.
  • Catering services
  • Mid-day meals scheme sponsored by the Central Government or State Government
  • Security services
  • Cleaning or house-keeping services performed in such educational institutions
  • Services relating to admission to, or conduct of examination by, such institution

Note: The above mentioned services are exempted only if provided to any educational institution providing services by way of pre-school education or education upto higher secondary school or equivalent. (I.e. pre-schools and schools offering education upto 12^th standard or equivalent)

6. What are the services that are exempted from GST if provided to a college or approved vocational institution?

• The following are the only services that are exempt if provided to a college or approved vocational institution
  1. Services relating to admission to, or conduct of examination by such colleges, universities or institutions.
  2. Supply of online educational journals or periodicals

7. Are the services relating to transportation of students provided to a college liable to GST?

• Yes, transportation facilities provided to the students, staff and faculty are exempt only if provided to a primary school or a school offering education upto higher secondary or equivalent.

8. When online educational journals are supplied to an approved vocational institution, will such services be exempted from GST?

• No the said services are not exempt, supply of online educational journals and periodicals are only exempted when supplied to educational institutions offering education as a part of a curriculum for obtaining a qualification recognized by any law. (Refer FAQ No 2)

9. What are the services that are exempt to all classes of educational institution?

• Any services relating to admission to, or conduct of examination by educational institution is exempted from GST.
• Note: Only services relating to conduct of examination are exempt, supply of goods in relation to conduct of examinations are not exempt from GST (i.e. supply of paper, stationery etc are not exempt)

10. Should private coaching classes charge GST?

• Services provided by the private coaching centres or tuitions do not fall under the approved vocational education courses nor do they provide any education as part of a curriculum approved by any law for the time being in course.
• Therefore, such coaching classes or tuitions are not covered within the meaning of educational institutions and hence taxable.

11. Will GST be levied on accommodation services (hostel) provided by educational institutions?

• Servcies provided by educational institutions to its student, staff and faculty are exempt from GST.
• Therefore, accommodation services provided by educational institutions by virtue of providing rooms in a hostel is exempted from the levy of GST provided the rooms are occupied by its student, staff or faculty.

12. Are services provided by boarding schools taxable?

• In a boarding school, the service of providing education is combined with other services such as facilities of providing food and accommodation. Such services are inseparable from each other and are thus exempt from GST.

13. Applicability of GST on placement services:

• Placement services provided to educational institutions for securing job placements for the students will be liable to GST.
• Similarly, GST is also applicable on the campus recruitment fees charged by the respective educational institutions from the companies participating in the campus recruitment.

14. Are services provided by Indian Institute of Management taxable?

• With effect from 31^st January 2018, IIM’s will be considered as educational institutions providing education as a part of a curriculum for obtaining a qualification recognized by any law and hence the exemption notification providing exemption to educational institutions providing services to its student, staff and faculty will be applicable to IIM’s also.
• However, short duration programs (less than a year) offered by IIM’s for which participation certificates are awarded are not exempted and hence is subject to levy of GST

15. When books and stationary are distributed by a school to its students, will such supply attract GST?

• Supply of books is exempted from GST. However, any other non-academic related supplies, uniform or stationery are not covered under any exemption and are hence taxable.

16. Consolidation of exemption applicable to educational institutions?