GST impact on education: Is it going to be expensive because of Goods and Services Tax (GST)? The Centre today denied such claims. Finance Minister Arun Jaitley said claims that education is going to be expensive after GST rollout are “unsubstantiated.” Jaitley further said no change has been made in any item or services related to the education sector in the GST era, except to reduce the tax rate on certain items.
“There is no change made on any subject relating to education in the GST era, except to reduce the tax rate on certain items…Rather tax rate has been reduced on certain items of education including school bags etc,” Jaitley said. According to the Centre, education is going to become cheaper as several items, which were taxed earlier, have been kept out of GST ambit.
A statement issued by the Ministry of Finance said services provided by an educational institution to students, faculty and staff are exempt. These include a) pre-school education and education up to higher secondary school or equivalent; b) education as a part of a curriculum for obtaining a qualification recognised by any law for the time being in force; c) education as a part of an approved vocational education course.
— Ministry of MSME (@minmsme) July 7, 2017
Some more exempted services include: transportation of students, faculty and staff services provided to an educational institution (providing pre-school education and education up to higher secondary school or equivalent); catering, including any mid-day meals scheme sponsored by the Centre, State or Union territory to an educational institution providing education up to higher secondary school or equivalent; security or cleaning or housekeeping services performed in such educational institutions; services relating to admission to, or conducting of examination by, such institutions, up to higher secondary.
“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 the pre-GST era and the same is continued in GST regime,” said the statement.
Under GST, services by institutions registered under section 12AA of Income Tax Act by way of charitable activities relating to advancement of educational programmes or skill development for abandoned, orphaned or homeless children; physically or mentally abused and traumatized persons; prisoners; persons over the age of 65 years residing in a rural area are also exempt from GST.