The GST Taxation Rules For Educational Institutions

The GST Taxation Rules For Educational Institutions

Understanding An Educational Institute As Defined Under GST

GSTdefines a service provider as an educational institute if they provide education at the pre-school level and up to higher secondary. It could also be an equivalent of it. An institute is also a place that offers approved vocational education. It can also be a service provider that tenders as part of its curriculum a qualification recognised by the law. Any of these places are termed as educational services and part of it is taxable. 

A taxable supply is a service, good or both supplied by an entity on which tax is levied. For educational institutes, these are the services which are not taxed under GST. 

  •   Security of institute.
  •   Housekeeping and cleaning services of the institute.
  •   Transport of people, be it staff, faculty or students.
  •   Catering to people. This is inclusive of the mid-day meal sponsored by Union Territory, State or Central Government.
  •   For institutes till higher secondary, admission connected services or examination conduction.

It has to be borne in mind that these services could be provided by the institute to staff, faculty, student, or another educational institute. Another critical factor here is the distribution of stationery, uniform, or non-academic items. They are all taxable. Anything supplied by third parties is taxable, these include:

  •   musical instruments
  •   computers
  •   sports equipment
  •   after-school activities

The supply of books is the only element that is free of tax under the GST regime.

Educational Institutions And Where They Get Exemptions From Tax

Exemptions on GST return for educational institutions.

When it comes the time for income tax return filing,there are some areas where educational institute gets an exemption. These points are listed below:

  •   If the educational institute is run by a charitable trust, then it is completely exempt from GST. The institute could be:

o    A school

o    A college

It should be meant for:

o    Orphans

o    prisoners

o    homeless children

o    abandoned children

o    physically or mentally abused persons

o    persons over the age of 65 years or above residing in a rural area

  •   Government and municipal schools are exempt because they are not included under the purview of supply of services. The same applies to any local or government authority educational activity. To know more, read this.
  •   The following services provided by IIM are exempted:

o    5 Year Integrated Programs in management studies. These do not include the Executive Development Program

o    Two years of full-time residential Post-Graduate Diploma in Management which requires admission through CAT

o    Fellowship programs in Management

  •   Some other areas of education that are free from tax are:

o    The Indian government set National skill development corporations

o    Assessment agencies approved by NSDC

o    Sector skill councils approved by NSDC

o    NSDC implemented schemes with training partners

o    All national skill development program supported by:

  • NSDC Vocational skill development program 
  • National skill certification and monetary reward scheme

Should An Educational Institute Be Registered Under GST?

GST registration a must for educational institutions.

After reading through the taxable and exemption rules for educational institutes under GST, it is time to answer the crucial question. Is it imperative for an educational service provider to register under GST in order to file ITR? 

  •   If an institute is only providing educational services, then it is not mandatory to register because their fees are levied nil tax.
  •   If the institute offers more services than just education such supply of books, uniforms, shoes and sundry, then they are required to register under GST.

It should be noted that all these GST exemptions are limited to schools, i.e., from pre-school to higher secondary. All services given to higher education colleges and institutes are taxable. For example, services like:

  •   Transportation
  •   Catering
  •   Housekeeping
  •   services relating to admission 
  •   services connected to conduct of examination

All these services supplied to higher educational institutions are levied a tax which is borne by the institute! A significant difference to note here is:

  •   services provided by an educational institute are free of GST
  •   but services provided to the institute are not.

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