GST latest news is being lapped up by all sectors of the economy because of the far reaching effects it may have. Education sector is also not left untouched. The education industry of our country is undoubtedly one of the largest worldwide. Our country has more than 1.4 million schools where more than 227 million students receive their education. The country also hosts more than 36,000 higher education institutes. The government encourages for further development in the education system incessantly. The distance education market in India is also growing exponentially.
The education sector in India can be divided into two broad categories. One is the education provided by public sector and the other is private sector where both are controlled by central, state or local. The ratio of public schools to private schools in India is 7:5. The country also provides free and compulsory education till the age of 14 by the government schools.
It is the country’s moral responsibility to provide quality education to all at low cost. And therefore, along with the healthcare industry, the education industry is also kept in either the zero or minimum tax bracket as the GST news says. However, private higher secondary schools might be an exception.
There is a lot of clarity which is still to come as far as the education industry is concerned. But as per the GST latest news, GST council has continued to keep education in the exemption list with the conditions applied. The education provided by the government institute will not be taxable. The education from pre-school to higher secondary that provides a recognized qualification status to the student and only approved vocational course will be exempted. GST news also specifies that the education services provided by the institute to the students and faculty, transportation services, catering, mid-day meals, security, cleaning, will remain GST free. Sports by charitable organizations and services by National skill development corporation (NSDC) will also be tax free. However, the charitable supplies like food or musical instruments uniform, stationary, and other non-academic supplies will be taxable.
According to the GST news, the services to higher educational institutions are not GST free. The institutes that provide higher education will have to pay GST. Private education will also incur GST and most likely will be taxed at the lowest slab of 5% under the Goods and Services Tax (GST) law. The GST rate of tax and the allowance of input tax credit or ITC could moderate the impact of taxes but an increase in the cost of education to the students is likely by at least 2 %to 3%.
The vocational training is also exempted from the GST, as the GST news confirms. But the training or coaching institutes will have to bear the taxes because the training institutes do not give a recognized qualification. The rate of taxation is expected to range somewhere around 12% to 18% as compared to the existing 15%, the exact rate is difficult to be derived since the variety of the services offered is huge.
Hence, it can be concluded from the latest GST news, that the new tax regime presents a mixed bag for the education sector. The clarity on scholarship and discounts is yet to come. Their administrative job is going to become tedious after GST as the GST latest news points out. Every coaching will have to register state wise even if they have several franchisee branches in many states of the country, which calls for the separate registration for every state. They will have to file more returns per year which will be quite a cumbersome job to them. Talking about the positive side, the process of taking ITC or input tax credit will become simpler after GST implementation.
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