GST on Education Services
1. Meaning of ‘Education’ under GST Law, 2017:
In GST the term ‘Education’ has not been defined, However, the Hon’ble Apex Court decision in ‘Loka Shikshana Trust vs. CTT defines ‘Education’ as a process of training and developing knowledge, skill and character of students by normal schooling. Under GST Act, core education services provided by educational institutions are exempted and other services are sought to be taxed under GST Law, 2017.
2. Meaning of Educational Institution:
As per Notification No. 12/2017-CT(Rate), dated. 28thJune, 2017, Para2(y) “Education 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 recognized by any law for the time being in force,
(iii) Education as a part of an approval vocational education course.
3. Meaning of approved vocational education course:
As per Notification No. 12/2017-CT(Rate), dated. 28th June, 2017, Para 2(h) “Approved vocational educational course means”:-
(i) A course run by an industrial training institute or an industrial training center affiliated to National Council for Vocational Training or State Council for Vocational Training offering courses in designated trades notified under the Apprentices Act, 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.
4. Meaning of Charitable Activities under GST Law, 2017:
As per Notification No. 12/2017-CT(Rate), dated. 28th June, 2017, Para. 2(r), “Charitable Activities” means activities relating ———-:
(iii) Advancement of educational programs or skilled development relating to:-
(A) Abandoned, orphaned or homeless children,
(C) Prisoners,
(D) Persons over the age of 65 years residing in a rural area.
5. Pre-School education and education up to higher secondary school or equivalent under GST Law:
As per clause (i) of Para 2(y) of Notification No. 12/2017 –CT(Rate), dated. 28th June, 2017. Educational institutions up to Higher Secondary School level do not liable to suffer GST on output services and also on other specified services, including services provided by ”International Baccalaureate Board” services by way of education up to higher secondary school or equivalent are covered in this entry.
6. Meaning of the term “education as a part of curriculum for obtaining a qualification recognized by any law”:
It means such educational services are related to delivery of education as a part of the curriculum that has been prescribed for obtaining a qualification prescribed by law. It is important to note that the service should be delivered as part of curriculum. Conduct of degree courses by colleges, universities or institutions which lead to grant of qualifications recognized by law would be covered. Training given by private coaching institutes would not be covered as such training does not lead to grant of a recognized qualification. Services provided by way of education as a part of a prescribed curriculum for obtaining a qualification recognized by a law of a foreign would not be covered in this entry. The course should be recognized by an Indian Law. In the context of vocational education/training/skill development courses (VEC) offered by an institution (as an independent entity in the form of society or any other similar body), qualification implies a Certificate, diploma, Degree or any other similar Certificate.
7. Educational Institutions run by Charitable Organizations:
As per CBIC based upon sectorial on Education Services “Educational Institutions run by Charitable Organizations”, Charitable trusts running institutions conforming to the definition of educational institution as specified in the notification would also be entitled to the exemption above.
Apart from the general exemption available to all educational institutions, charitable activities of entities registered under Section 12 AA of the Income Tax Act, 1962 is also exempt. The term charitable activities are also defined in the notification. Thus, following activities will be considered as charitable and receipts from such services will be wholly exempt from GST in terms of Notification No. 12/2017-Central Tax (Rate) dated. 28th June, 2017.
(i) Running schools, colleges or any other educational institutions, or,
(ii) Performing activities related to advancement of educational programs specifically for abandoned, or orphans, homeless children, physically or mentally abused persons, prisoners or persons over age of 65 years residing in a rural area.
8. Pre-primary education services:
This services relates to “education services” usually provided by nursery school, kindergartens, pre-schools, centers for early childhood education, centers for infant education or special sections attached to primary schools. Pre-primary education is defined as the initial stage of organized instruction designed primary to introduce very young children to a school type environment, that is, to provide a bridge between the home ad a school based atmosphere. The Service Accounting Code of this services is 999210 as per GST Law, 2017.
9. Primary education services:
This services includes educational services provided at the first level like from classes 1 to V, primary education provided under education guarantee scheme ad alternative and innovate scheme. Provision of literacy programs for adults at primary level special education for handicapped students at primary level. The Service Accounting Code of the above service is 999220 as per GST Law, 2017.
10. Secondary Education Services:
This services for secondary programs that become increasingly specialized as a student moves from one level to the next level. These programs can be general or technical or vocational according to the following definitions:
(a) General Programs: Covers education which is not designed explicitly to prepare participants for a specific class of occupations or trade or for entry into further vocational or technical education programs.
(b) Technical or Vocational: Covers education that prepares participants for direct entry, without further training into specific occupations. Successful completion of such programs leads to a labour market relevant vocational qualification.
The Service Accounting Code of the above service is 99923 as per GST Law, 2017.
11. Secondary education services, General:
This services generally aiming to complete the provisions of basic skills and knowledge of the primary level, although teaching is typically more subject focused, often employing more specialized teachers who conduct classes in their field of specialization. These services cover education that prepares participants for direct entry without further training into specific occupations. Successfully completion of such programs leads to a labour market relevant vocational qualification. Services related to the provision of special education programs at this educational level. The Service Accounting Code of the above service is 999232 as per GST Law, 2017.
12. Higher education services, General:
This services includes higher education services i. e. higher secondary level, in the fields such as humanities, arts, social sciences etc. , The Service Accounting Code of the above service is 999241 as per GST Law, 2017.
13. Higher education services, Technical:
This services includes higher education services i. e. above higher secondary level in technical fields such as engineering, medical and bi-technology etc. , The Service Accounting Code of the above service is 999242 as per GST Law, 2017.
14. Higher education services, vocational:
This services includes vocational education is education that prepares people to know works as a technician or in various jobs such as a tradesmen or an artisan. Vocational education is sometimes referred to as career and technical education such as vocational school is a type of educational institution specially designed to provide vocational education. Vocational education can take place at the post -secondary, further education or higher education level and can interact with the apprenticeship system. At the post-secondary system level vocational education is often provided by highly specialized trade school, technical schools, community colleges, colleges of future education and universities as well as institutes of technology (Polytechnic institutes). The Service Accounting Code of the above service is 999243 as per GST Law, 2017.
15. Other higher education services :
This services includes higher education also called post-secondary education, third-level education is an option final stage of formal learning that occurs after completion of secondary education. It is delivered at universities, academies, colleges, seminaries, conservatories and institute of technology and through certain college – level institutions includes vocational schools, trade schools and other career colleges that award degree. The Service Accounting Code of the above service is 999249 as per GST Law, 2017.
16. Specialized education services:
This services includes education services leading to an advanced research qualification such as a doctoral degree in various fields. The Service Accounting Code of the above service is 999259 as per GST Law, 2017.
17. Cultural education services:
This services includes piano and other music instruction services, art instruction services, dance instruction services and dance studios, art instruction except academic photography instructions. The Service Accounting Code of the above service is 999291as per GST Law, 2017.
18. Sports and recreation education services:
This services includes these following sports and recreation education services:-
(a) Sports instruction services by sports camps and schools or by professional sports instructors, teachers or coaches to group of individuals. It does not include the provision of such services by academic schools, colleges and universities,
(b) Sports instruction like base -ball, basketball, cricket, football, hockey, tennis, figure skating etc. ,
(c) Camps sports instructions,
(d) Gymnastic instruction,
(e) Riding instructions,
(f) Swimming instruction,
(g) Martial arts instructions,
(h) Card game instructions such as bridge,
(i) Yoga instruction.
The Service Accounting Code of the above service is 999292 as per GST Law, 2017.
19. Commercial training and coaching services:
This services includes any training or coaching provided by any institute or establishment providing commercial training or coaching for imparting skill or knowledge or lessons on any subject or field other than the sports, with or without issuance of a certificate and includes coaching or tutorials. The Service Accounting Code of the above service is 999293 as per GST Law, 2017.
20. Other education and training services n. e. c. :
This services includes the following other education and training services etc:-
(a) Training for car, bus, lorry and motor driving licenses,
(b) Training for flying certificates and ship licenses,
(c) Computer training services,
(d) Management training services,
(e) Services provided by music camps, science camps, computer camps and other institutional camps except for sports,
(f) Educational services not defined by level. ,
The Service Accounting Code of the above service is 999294 as per GST Law, 2017.
21. Services involving conduct of examination for admission of educational institutions:
This services includes all services provided with respect o conduct of examinations for admission to various courses or groups in various grades. The Service Accounting Code of the above service is 999295 as per GST Law, 2017.
22. Other educational Support services:
This services includes on-instructional services that support educational processes systems such as educational consulting, educational guidance, counseling services educational testing evaluation services, educational testing services, organization of student exchange programs. The Service Accounting Code of the above service is 999299 as per GST Law, 2017.
23. The following services are identified in respective ”Service Accounting Codes” as per GST Law, 2017:
(a) Services relating to literacy programs for adults identified with SAC code. 999220,
(b) Higher education services comparable to the regular education system identified with SAC” code 99924,
24. Various programs conducted by Indian Institutes of Managements (IIMS):
As per Circular No. 82/01/ 2019-GST dated. 01. 01. 2019, The Indian Institute of Management Act, 2018 came into force on 31st January, 2018. According to provisions of the IIM Act, all the IIMs listed in the schedule to the IIM Act are ”Institutions of national importance”. They are empowered to:
(i) grant degrees, diplomas and other academic distinctions or titles,
(ii) specify the criteria and process for admission to courses or programs of study, and
(iii) specify the academic content of programs.
Therefore, with effect from 31st January, 2018, all the IIMs are ”educational institutions” as defined under Notification No 12/2017-CT(Rate) dated. 28. 6. 2017 as they provide education as a part of a curriculum for obtaining a qualification recognized by law for the time being in force.
The following clarification has been provided for determining the eligibility of various programs conducted by IIMs for exemption form GST:
| S. No. | Periods | Programs offered by IIMs | Whether exempt from GST |
|---|---|---|---|
| 1 | 01. 07. 2017 to 39. 01. 2018 | (a). 2 years full time P. G. Programs in Management for the Post Graduate Diploma in Management to which admissions are made on the basis of CAT conducted by the IIM (b). Fellow program in Management, (c ). 5 years integrated program in Management | Exempted from GST |
| (a). One-year Post Graduate Programs for Executives, (b). Any Programs other than those mentioned above, (c). All short duration executive development programs or need based specially designed programs (less than one year) | Not Exempted from GST (Taxable under GST) | ||
| 2 | 31. 01. 2018 to 31. 12. 2018 | All long duration programs (One Year or more) conferring degree or diploma as recommended by Board of Governors as per the power vested in them under the IIM Act, 2017 including one-year Post Graduate Programs for Executives. | Exempted from GST |
| All short duration executive development programs or need based specially designed programs (less than one year) which are not a qualification recognized by law. | Not Exempted from GST (Taxable under GST) | ||
| 3 | w. e. f. 01. 01. 2019 | All long duration programs (One Year or more) conferring degree or diploma as recommended by Board of Governors as per the power vested in them under the IIM Act, 2017 including one-year Post Graduate Programs for Executives. | Exempted from GST |
| All short duration executive development programs or need based specially designed programs (less than one year) which are not a qualification recognized by law. | Not Exempted from GST (Taxable under GST) |
Annexure -1 of the Circular (Programs exempted under GST Law):
The IIM, Ahmedabad refers such persons as their students who attend long duration programs offered by the Institute for which diplomas or degrees are awarded by the Institute. These programs are awarded based on the recommendation by the Board of Governors as per the power vested in them under II Act, 2017. Such programs are:-
(a) Post Graduate Program (PGP) – 2 years program,
(b) Post Graduate Program in Food ad Agri-Business Management (PGP-FABM) -2 years program,
(c) Fellow Program in Management for Executives (FPM)-4 to 5 years program,
(d) Post Graduate Program in Management for Executives (PGPX)-12 months (I year) full this program,
(e) E-Post Graduate Program (ePGP) -2 year Program.
This is an example of long duration program recognized under IIM Act, 2017 offered by IIM Ahmedabad. Similar programs offered by other IIMs of India may kindly be referred by IIMs and Tax authorities during assessment.
Annexure -2 of the Circular: Program not exempted under GST Law, 2017:
The executives or professionals doing short term courses (less than one year) are considered as”Participants” of the programs of the IIM Ahmedabad. They are:-
[a] Armed Forces Programs,
[b] Faculty Development Programs,
[c] Executive Education:
1. Customized Executive Programs,
2. Open enrolment Program.
This list is an example of short duration executive development programs offered by IIM, Ahmedabad which are available to participants. Similar programs offered by other IIMs of India may kindly be referred by IIMs and Tax Authorities during Assessment.
25. Lodging and Boarding provided in Hostels by the Educational Institute:
As per Press Release on Education Service by CBIC on 13th July, 2017, Services of lodging and Boarding in hostel provided by such educational institutions which are providing preschool education and education up to higher secondary school or equivalent or education leading to a qualification recognized by law, are fully exempt from GST. Annual subscription /fees charged as lodging/boarding charges by such educational institutions from its students for hostel accommodation shall not attract GST.
Hostel accommodation services do not fall within the ambit of charitable activities as defined in Para 2® of Notification No. 12/2017-CT (Rate). However services by a hotel, inn, guest house club or campsite by whatever name called for residential or lodging purposes having value of supply of a unit of accommodation below Rs. 1, 000/- per day or equivalent are exempt. Thus, accommodation service in hostels including by Trusts having i. e. value of supply below Rs. 1, 000/- as per notification no. 14/2018 –Central Tax, ( Rate) dated. 26. 7. 2018.
Room or unit accommodation services provided by hostels, camps, paying guest etc. , . Thus, services by private hostel and paying guest have been classified as accommodation services. These accommodation services, if having value of supply below Rs. 1, 000/- per day will be exempt vide entry 14 of Notification No. 12/2017.
26. Supply of food and beverage services by educational institution:
As per Circular No. 85/04/2019-GST dated. 01stJanuary, 2019-GST rate applicable on supply of food and beverage services by educational institutions(Extracts). Notification No. 11/2017-CTR-dated. 28. 6. 2017. Serial No. 7(i) prescribes GST rate of 5% on supply of food and beverages services.
Explanation. 1 to the said entry states that such supply can take place at canteen, mess, cafeteria of an institution such as school, college, hospitals etc. On the other hand Notification No. 12/2017-CTR-Serial O. 66(a) exempts services provided by an educational institution to its students, faculty and staff. There is no conflict between the two entries. Entries in Notification No. 11/2017-CTR prescribing GST rates on services have to be read together with entries in exemption Notification No. 12/2017-CTR dated. 28. 6. 2017. “ A supply which is specifically covered by any entry of Notification No. 12/2017-CTR dated. 28. 6. 2017 is exempt from GST notwithstanding the fact that GST rate has been prescribed for the same under Notification No. 1/2017-Central Tax (Rate) dated. 28. 06. 2017.
Supply of all services by an educational institution to its students, facility and staff is exempt under Notification No. 12/2017-CTR, dated. 28. 6. 2017, Serial No. 66. Such services include supply of food and beverages by an educational institution to its students, faculty and staff.
Accordingly, it is clarified that supply of food and beverages by an educational institution to its students, faculty and staff, where such supply is made by the educational institution itself, is exempt under Notification No. 12/2017-CTR dated. 28. 6. 2017. vide serial no. 66 w. e. f. 01. 07. 2017, itself. However, supply of food and beverages by any person other than the educational institution is leviable to GST @5%.
In order to removal any doubts on this issue, Explanation-1 to Entry 7(i) of Notification No. 11/2017-CTR dated 28. 6. 2017 has been amended vide Notification No. 27/2018-CTR dated. 31. 12. 2018 to omit from it the words ”School, College, “. Further heading 9963 has been added in Column (2) against entry at serial no. 66 of Notification No. 12/2017-CTR dated. 28. 6. 2017, vide Notification No. 28/2018-CTR dated 31. 12. 2018. (Circular No. 28/02/2018 dated. 08th January 2018 read with Corrigendum dated 18th January, 2018-Not Incorporated, as withdrawn vide Circular No. 50/24/2018 dated. 31st July, 2018.
27. Place of supply of education services:
If location of education institution and students are in India: As per section 12(6) of IGST Act, 2017, place of supply of services provided by way of admission to a cultural, artistic, sporting scientific educational, entertainment event or amusement park or any other place and services ancillary thereto shall be the place where the event is actually held or where the park or such other place is located. Thus, in general, the place of supply of education services by Indian institutions would be the place where the education institution is located.
As per Section 12(7) of the IGST Act, place of supply of services provided by way of :-
(i) Organization of a cultural, artistic, sporting, scientific, educational or entertainment event including supply of services in relation to a conference, fair, exhibition, celebration or similar events, or
(ii) Services ancillary to organization of any of the events or services referred to in clause (a) or assigning of sponsorship to such events:-
(a) To a registered person shall be the location of such person,
(b) To a person other than a registered person, shall be the place where the event is actually held,
And if the event is held outside India, the place of supply shall be the location of the recipient.
Where event is held in more than one State/UT and consolidated amount is received, the supply of service shall be treated as made in each of the States/UT. It shall be determined as per contract or agreement proportionately and in its absence, on such other reasonable basis as prescribed in the Rules.
28. Value of services where event is held in more than one State/UT-In the absence of contract/ agreement:
As per Rule 5 of the IGST Rules, 2017, s notified vide Notification No. 04/2018-IT dated. 31st December, 2018, as under:-Where the services are supplied to a person other than a registered person, the event is held in India in more than one State or UT and a consolidated amount is charged for supply of such services, shall be taken as being in each of the respective States or UT and in the absence of any contract or agreement between the supplier of service and recipient of services for separately collecting or determining the value of services in each such State or UT, as the case may be shall be determined by application of the generally accepted accounting principles.
As per Section 12(3) of IGST Act, 2017, the place of supply of services:-
(b). By way of lodging accommodation by a hotel, inn, guest house, home stay, club or comp site by whatever name called and including a house boat or any other vessel.
Thus, unless the hostel service is provided by the educational institution as composite supply along with education service, the place f supply of hostel shall be the location at which hostel is located. Thus, in general, the place of supply of education service by Indian educational institutions would be the place where the education institutions would be the place where the education institution is located.
If education institution or the student is located outside India: As per Section 13(5) of the IGST Act, 2017, the place of supply of services supplied by way of admission to, or organization of a cultural, artistic, sporting, scientific, educational or entertainment event, or a celebration, conference, fair, exhibition or similar events, and of services ancillary to such admission or organization, shall be the place where the event is actually held.
As per Section 13(3)(b) of the IGST Act, 2017, the place of supply of the following services shall be the location where the services are actually performed:
(b). Services supplied to an individual, represented either as the recipient of services or a person acting on behalf of the recipient, which require the physical presence of the recipient or the person acting on his behalf, with the supplier for the supply of services.
Where services are supplied at more than one location, including a location in the taxable territory, its place of supply shall be the location in the taxable territory.
Where services are supplied in more than one State/UT, place of supply of such services shall be taken as being in each of the respective State or UT and value of such supplies specific to each State and UT shall be in proportion to the value for services separately collected or determined in terms of the contract or agreement entered into in this regard or, in the absence of such contract or agreement, on such basis as may be prescribed.
29. Value of services where services are provided in more than one State/UT –In absence of contract or agreement:
As per Rule 7 of the IGST Rules is notified vide Notification No. 04/2018-IT dated 31st December, 2018 as under:-
| Nature of Service | Manner of Allocation |
|---|---|
| Services supplied to Individuals. | By applying the generally accepted accounting principles. |
Thus, where education service to a foreign student is provided by an Indian school, it will be taxable in the State where school is located. Where education service to a student is provided in India as well as outside India, it would be taxable in India.
If it is provided in more than one state, then it would be taxable in all these states proportionately. And if the school is located outside India and service to an India Student is provided from that place only then it would not be subject to GST.
30. Requirement of Registration :
If provided only exempted services, not liable for registration under Section 23 of the CGST Act, 2017, otherwise liable to take registration in accordance with Section 22 and 24 of CGST Act, 2017.
Benefit of threshold limit specified under Section 22 of the GST Act, 2017 is available, subject to compulsory registration as per Section 24 of the CGST Act, 2017. Aggregate turnover includes taxable as well as exempted supplies.
31. Input Tax Credit:
Claiming of Input Tax Credit is not eligible, if used in providing exempt educational services. If the educational Institution, where output services are exempted, the educational institution could not avail of tax paid on the inputs and input services. Input services, such as repairs and maintenance, rent of immovable property etc. , Provided by private entities to educational institutions were subject to service tax in pre-GST era, and the same tax treatment has been continued in GST regime. Many a times, the educational institutions procure services of specialized persons, such as computer and IT experts, to train the teachers and students. These experts raise invoices upon the schools and the services qualify to be auxiliary education service. The schools generally do not charge from the students and it is the part of their school fee. However, in the absence of specific exemption, such service would be subject to GST.
Exemption to Input Services (Educational Services): As per Notification 12/2017-Central Tax dated. 28. 6. 2017 (Sl. No. 66)services when provided to an education institution by way of following manner, are exempt.
| S. No. | Input Services received by the Educational Institutions | Exempt with effect from the date |
|---|---|---|
| 1 | Services provided to an educational institution, who is providing services by way of pre-school education and education up to higher secondary school or equivalent | |
| (a) Transportation of students, faculty and staff | 01. 07. 2017 | |
| (b) Catering, including any mid-day meals scheme sponsored by the Central/State Government or Union Territory | 01. 07. 2017 | |
| (c) Security or cleaning or house-keeping services performed in such educational institution | 01. 07. 2017 | |
| 2 | Services provided to an educational institution, by way of services relating to admission to or conduct of examination by such institution. | |
| (a) Educational institution providing services up to Higher Secondary | 01. 07. 2017 | |
| (b) All educational institutions including (a) above | 25. 01. 2018 | |
| 3 | Services provided to an educational institution by way of supply of online education journals or periodicals. However, this exemption shall not apply to an institution providing services by way of:- (a). pre-school education and education up to higher secondary school or equivalent, or | 25. 01. 2018 |
| 4 | Services received from a provider of service located in a non-taxable territory by :- As per Notification No. 2/2018-Integrated Tax9Rate) dated. 25. 01. 2018, “(ba) by way of supply of online educational journals or periodicals to an educational institution other than an institution providing services by way of:- (i). Pre-school education and education up to higher secondary school or equivalent, or | 25. 01. 2018 |
| 5 | Services by way of giving on hire motor vehicle for transport of students, faculty and staff, to a person providing services of transportation of students, faculty and staff to an educational institution providing services by way of pre-school education and education up to higher education. It may be noted that transportation of students, faculty and staff to educational institution is already exempt w. e. f. 01. 07. 2017. By virtue to this entry, hiring of motor vehicle would also be exempt. | 25. 01. 2018 |