GST exemption applicable to Education services

We have already discussed GST exemption applicable to services by a charitable or religious trust and agricultural related services. In this post, we will discuss GST exemption applicable to services provided by an educational institution.

Educational institutions are the backbone of India’s growth. To reduce the cost of basic education and to enhance skills of India with a low cost, the government of India has provided exemption from GST to certain education services. This exemption to educational institutions is broadly covered in notification number 12/2017. In this article, we will be discussing GST exemption applicable to education services.

GST exemption for Services provided by an educational institution

As per notification number 12/2017, services provided by an educational institution to its students, faculty and staff are exempt from GST.

Services provided by an educational institution by way of conduct of entrance examination against consideration in the form of entrance fee is exempt from GST.

Educational institutions have been defined in the notification. For the purpose of this exemption, educational institution means an institution providing services by way of,- 

(i) pre-school education and education up to higher secondary school or equivalent; 

(ii) education as a part of a curriculum for obtaining a qualification recognised by any law for the time being in force; 

(iii) education as a part of an approved vocational education course;

As per the definition of educational institution all degree courses by college, universities or institutions are covered for exemption under GST as it is provided to obtain a qualification recognised by Indian law for the time being in force. Private coaching centers and other unrecognized institutions will not be treated as educational institutions under GST, therefore not eligible for exemption from GST.

Here are certain cases where services by educational institution is not exempt from GST;

  • Training by private coaching institutions if its not for obtaining qualification recognised by law;
  • Education provided to obtain a qualification recognised by a law of foreign country and not recognised by Indian law.

As per the definition an institution providing services by way of education as a part of an approved vocational education course, will be treated as an educational institution. If such vocational education courses are for students, faculty and staff, then it will be exempted from GST. Therefore, an approved vocational education course is important here.

For the purpose of this exemption notification, approved vocational education course” means, –

(i) a course run by an industrial training institute or an industrial training centre affiliated to the National Council for Vocational Training or State Council for Vocational Training offering courses in designated trades notified under the Apprentices Act, 1961 (52 of 1961); or

(ii) a Modular Employable Skill Course, approved by the National Council of Vocational Training, run by a person registered with the Directorate General of Training, Ministry of Skill Development and Entrepreneurship;

Based on above discussion here are cases where exemption can be granted under GST law;

ITIs

As per Circular No. 55/29/2018-GST dated 9th August, 2018, it is clarified by government that Private ITls qualify as an educational institution as defined under para 2(y) of notification No. 12/2017-CT(Rate) if the education provided by these ITls is approved as vocational educational course. The approved vocational educational course has been defined in para 2(h) of notification ibid to mean a course run by an ITI or an Industrial Training Centre affiliated to NCVT (National Council for Vocational Training) or SCVT (State Council for Vocational Training) offering courses in designated trade notified under the Apprenticeship Act, 1961; or a Modular employable skill course, approved by NCVT, run by a person registered with DG Training in Ministry of Skill Development. Therefore, services provided by a private ITI in respect of designated trades notified under Apprenticeship Act, 1961 are exempt from GST under Sr. No. 66 of notification No. 12/2017-CT(Rate). As a corollary, services provided by a private ITI in respect of other than designated trades would be liable to pay GST and are not exempt.

In case of designated trades, services provided by a private ITI by way of conduct of entrance examination against consideration in the form of entrance fee will also be exempt from GST [Entry (aa) under Sr. No. 66 of notification No. 12/2017-CT(Rate) refers]. Further, in respect of such designated trades, Services provided to an educational institution, by way of, services relating to admission to or conduct of examination by a private ITI will also be exempt [Entry (b(iv)) under Sr. No. 66 of notification No. 12/2017-CT(Rate) refers]. It is further clarified that in case of other than designated trades in private ITls, GST shall be payable on the service of conduct of examination against consideration in the form of entrance fee and also on the services relating to admission to or conduct of examination by such institutions, as these services are not covered by the exemption ibid.

Services provided by a Government ITI to individual trainees/students, is exempt under SI. No. 6 of 12/2017-CT(R} dated 28.06.2017 as these are in the nature of services provided by the Central or State Government to individuals. Such exemption in relation to services provided by Government ITI would cover both – vocational training and examinations conducted by these Government ITls.

If any fee charged by an educational institution for a qualification not recognised by law, then such services provided by such educational institution participants are not exempted from GST.

Certain educational institutions collect a fee from prospective employers for participating in campus placement to recruit candidates. Such services shall be liable to GST as it is not exempted.

In case two or more services are provided bundled together, then you need to find out whether composite or mixed supply provisions are applicable or not and accordingly rate of GST should be determined.

GST exemption for services provided to an educational institution

 As per the notification, service provided to an educational institution, by way of,-

(i) transportation of students, faculty and staff;

(ii) catering, including any mid-day meals scheme sponsored by the Central Government, State Government or Union territory;

(iii) security or cleaning or house-keeping services performed in such educational institution;

(iv) services relating to admission to, or conduct of examination by, such institution; upto higher secondary:

(v) supply of online educational journals or periodicals

However, nothing contained in sub-items (i), (ii) and (iii) of item (b) shall apply to an educational institution other than an institution providing services by way of pre-school education and education up to higher secondary school or equivalent. 

This means, if transportation of students, faculty and staff, catering, security, cleaning and house-keeping services are provided to educational institutions providing degree or higher education (i.e. other than education from preschool to HSC), then such services shall not be exempt from GST.

Online educational journals or periodicals

Further, exemption for service provided for supply of online educational journals or periodicals shall not apply to an institution providing services by way of pre-school education and education up to higher secondary school or equivalent, or  education as a part of an approved vocational education course. 

Which means exemption for services providing supply of online educational journals or periodicals is applicable to those educational institutions which are not providing service by way of pre-school education and education up to HSC or equivalent. 

For instance, if services provided by supplying online educational journals or periodicals to educational institutions providing education as a part of curriculum for obtaining recognised qualification or approved vocational course, then exemption from GST such services is available.

Catering services by/to an educational institution

In an educational institution, you will find a mess facility or cafeteria for providing food to their students and staff. Is catering or mess services exempted from GST?

We have to find out first who is providing such services. If catering services are provided by an educational institution to its students, faculty and staff, then, it is exempted from GST.

If the catering service is provided by an outside contractor in an educational institution, then such services will be treated as supply of services not exempted from GST. Outside contractor means someone who is not an educational institution. 

However, if such catering service provided by an outside contractor is to an educational institution providing services by way of pre-school education and education up to higher secondary school or equivalent, then such catering services are exempt from GST.

Please note, if output services are exempted then, you are not allowed to avail input tax credit. Same provision is applicable to an educational institution.

is a fellow member of the Institute of Chartered Accountants of India. He lives in Bhubaneswar, India. He writes about personal finance, income tax, goods and services tax (GST), company law and other topics on finance. Follow him on facebook or instagram or twitter.