No GST exemption to institute providing coaching, accommodation to CA/CS students, says AAR

By: |
August 26, 2020 9:21 PM

The AAR observed that the applicant is not approved by the Institute of Chartered Accountants of India/Institute of Cost Accountants of India/Universities

gst newsAAR said, “The applicant is not covered under the definition of “educational institution”… (as per GST rate structure) and hence the services provided by the applicant is not exempted from GST”.

The Kerala-bench of the AAR has ruled that an institute imparting education to students for obtaining qualifications like Chartered Accountancy (CA), Cost Accountancy, Company Secretary (CS) are not covered under the definition of “educational institution” as per GST law, and hence liable to pay 18 per cent tax. Logic Management Training Institutes Pvt Ltd had approached the Authority of Advance Ruling (AAR) on whether the education programme and training being offered by the applicant is exempted from GST.

The institute imparts education to students to facilitate them in obtaining qualifications like CA, Cost Accountancy, CS, Certified Management Accountant, Certified Public Accountant, Association of Chartered Certified Accountant.

The AAR observed that the applicant is not approved by the Institute of Chartered Accountants of India/Institute of Cost Accountants of India/Universities to conduct coaching/training of students as per the syllabus prescribed by them to obtain qualifications granted by the said institution.

It said the coaching services provided by the applicant to its students along with the hostel facility qualifies as a composite supply and the tax liability on the composite supply shall be classified as “commercial training and coaching services”.

In its ruling, the AAR said, “The applicant is not covered under the definition of “educational institution”… (as per GST rate structure) and hence the services provided by the applicant is not exempted from GST”.

Hence the services provided by the institute with respect to educational services, hostel accommodation services, and sale of textbooks shall not be exempt from GST.

AMRG & Associates Senior Partner Rajat Mohan said education is a noble profession, however, for the purposes of taxation, the entire category of “commercial training and coaching services” are chargeable GST at the rate of 18 per cent.

“Government as a policy matter may rationalise the tax rate in the education sector and bring the tax rate down from 18 per cent to make it affordable and available to the marginalised ones,” Mohan added.

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