Introduction
The Goods and Services Tax (GST) was introduced in India to streamline the taxation system by unifying indirect taxes across the country. While GST has been beneficial for various sectors, its application in the education sector has created a mix of challenges and opportunities. Education is an essential pillar of development, and its accessibility and affordability are critical for the country’s growth. Therefore, the impact of GST on education in India is a topic of considerable importance.
Under the GST regime, different types of educational services are taxed differently. While primary and secondary education offered by government and non-profit institutions is exempt from GST, private coaching centers, vocational training institutions, and EdTech platforms are subject to an 18% GST rate. This discrepancy has led to concerns regarding the affordability of education, especially when students are subjected to high taxes for services outside the formal education system.
For example, if a student enrolls in a government-recognized degree program, they don’t pay GST on tuition fees. However, if the student opts for a private coaching institute or an online learning platform, they are required to pay GST on education at the rate of 18%. This imbalance makes education less affordable for students relying on private or non-traditional educational services.
In this article, we will thoroughly explore the impact of GST on education in India, breaking down how GST rates are applied, the exemptions that exist, and the compliance requirements that schools, colleges, and other educational institutions must follow.
How Does GST Apply to Education Services?
In India, GST on education applies in various ways depending on the type of educational service provided. Education is categorized into different sectors under GST, and the tax rate for each sector varies based on its nature.
Categories of Educational Services Under GST
- Core Educational Services:
These services include the formal education provided by schools, colleges, and universities, leading to degrees or diplomas recognized by law. Core educational services are exempt from GST. This exemption ensures that the primary education system remains affordable for students. - Auxiliary Educational Services:
These services include transportation, catering, hostel facilities, and other additional services offered by educational institutions. While some of these services are exempt from GST, others attract GST under education GST rules India. For instance, transportation services provided by educational institutions may be exempt from GST, but if the service is provided by a third party, it could be taxable. - Private and Commercial Educational Services:
This category includes private coaching centers, vocational training institutes, and online education platforms. These services are taxable under GST at the rate of 18%, which has increased the financial burden on students opting for these educational options.
Education GST Rates for Schools, Colleges, and Coaching Centers
One of the most important aspects of GST on education in India is understanding the different tax rates applicable to educational services. The education GST rates vary significantly across different educational services, which can make navigating the tax landscape confusing for institutions and students alike.
GST Rates Breakdown for Various Educational Institutions
| Type of Institution | GST Rate |
| Pre-Schools & Schools (up to Higher Secondary) | Exempt |
| Colleges & Universities (offering recognized degrees) | Exempt |
| Coaching Centers & Private Tutorials | 18% |
| Online Learning Platforms | 18% |
| Vocational Courses (Recognized by Law) | Exempt |
| Skill Development Programs (NSDC certified) | Exempt |
| Non-Recognized Degree Courses | 18% |
Example:
A student enrolling in a private coaching program for competitive exams such as IIT-JEE or UPSC will pay an additional 18% GST on education. For example, if the tuition fee for a coaching program is ₹1,00,000, the student will need to pay an additional ₹18,000 as GST on education, bringing the total cost to ₹1,18,000. This GST on education significantly increases the financial burden on students preparing for competitive exams.
On the other hand, students attending schools or universities offering recognized degree programs are exempt from GST on education. This exemption ensures that the cost of formal education remains affordable for the masses.
Which Educational Services Are Exempted from GST?
To make education more accessible, the government has granted GST exemptions to certain educational services. These exemptions primarily cover formal education and vocational training programs.
Key Exemptions Under GST for Education Services
- Government and Non-Profit Institutions:
Educational institutions run by the government, local authorities, or charitable organizations are exempt from GST. These institutions include primary and secondary schools, as well as universities and colleges offering recognized degree courses. - Degree Courses Recognized by Law:
Universities and colleges offering recognized degree programs, such as undergraduate and postgraduate courses, do not attract GST. This exemption aims to reduce the financial burden on students seeking formal higher education. - Vocational and Skill Development Programs:
Vocational training courses that are certified by the National Skill Development Corporation (NSDC) are exempt from GST. This exemption helps in promoting skill development and vocational education across India. - Hostel, Mess, and Transport Services:
Hostel, mess, and transport services provided by exempt educational institutions remain free from GST. However, if these services are provided by a third-party vendor, they may attract GST at rates ranging from 5% to 18%.
Example:
A student attending a government-run vocational training program certified by NSDC will not have to pay any GST on the training fees, making such programs more affordable.
How GST Affects Tuition Fees and Online Learning
The introduction of GST on education has impacted both traditional education services and newer forms of learning such as online education. While formal education at schools and universities remains largely exempt from GST, private coaching centers and online learning platforms face significant tax burdens.
Impact of GST on Tuition Fees
Although tuition fees for formal education are exempt from GST, additional services provided by educational institutions—such as food, transportation, and extracurricular activities—are subject to GST. This increases the overall cost of education. For example, if a student attends a private school that offers extra-curricular activities, those activities will be taxed under GST, thus raising the total fee structure.
Impact on Online Learning
Online learning platforms have become increasingly popular, especially since the COVID-19 pandemic. However, GST on education for online courses is set at 18%. This means that students who enroll in online certification programs, such as those offered by Byju’s, Unacademy, or Coursera, must pay an additional 18% GST.
Example:
An online course priced at ₹50,000 will incur an additional ₹9,000 in GST, making the total cost ₹59,000. This increase in cost may make online learning less accessible, especially for lower-income students.
GST Compliance for Educational Institutions
Educational institutions must comply with GST regulations to avoid penalties and ensure smooth operations. This is crucial for institutions providing both exempt and taxable services.
Key GST Compliance Requirements for Educational Institutions
- GST Registration:
Educational institutions providing taxable services, such as coaching centers or online platforms, must register for GST. However, those offering only exempt services, like schools and universities, are not required to register under GST. - Invoicing and Tax Filing:
Institutions offering taxable services must issue invoices and file regular tax returns, either monthly or annually, depending on their turnover. Non-compliance with invoicing or tax filing could lead to penalties. - Input Tax Credit (ITC):
Institutions that provide taxable services can claim Input Tax Credit (ITC) for the tax paid on inputs used for taxable services. This helps reduce the overall tax burden.
Conclusion
The impact of GST on education in India has been a subject of much debate. While the exemptions for core educational services help ensure that primary and secondary education remains affordable, the taxation of private coaching centers, online courses, and vocational training programs has increased the financial burden on students.
A balanced approach to taxation, perhaps by reducing GST rates for private educational services, could make education more accessible to all. Educational institutions must also ensure compliance with GST rules India to avoid penalties and smoothen their operations.
RegisterKaro is a trusted partner in helping educational institutions navigate the complexities of GST. Our services include:
- GST registration and filing for educational institutions.
- Expert advice on GST on education and tax planning.
- Efficient management of Input Tax Credit (ITC) claims.
Contact Us Today
Email: support@registerkaro.in
Call: +918447746183
Frequently Asked Questions (FAQs)
- Are all educational institutions exempt from GST?
No, only recognized schools and universities are exempt from GST. Private coaching centers and online platforms are taxed at 18%. - Is GST applicable on international courses?
Yes, courses provided by foreign institutions may fall under the Reverse Charge Mechanism (RCM), requiring students to pay GST. - Can educational institutions claim Input Tax Credit (ITC)?
Institutions offering taxable services can claim ITC. - Is GST applicable to hostel fees?
Hostel services provided by exempt educational institutions are not taxed, but third-party providers may charge GST. - How can institutions ensure GST compliance?
By registering under GST (if applicable), maintaining proper records, and seeking expert advice.
