GST on education services is nil, but input tax cost concerns remain

The Education and Training Sector in India is one of the key priority areas of the government and the same is reflected by their desire to levy low or no
tax on this sector.

The government's aim has always been to encourage the education industry which is well reflected through the various exemptions being n

otified through Service Tax
and Value Added Tax laws. It may not be possible to accommodate all the concerns of an industry, however, the education and training sector has been granted certain exemptions and has also borne the burden of indirect taxes in certain situations.

Accordingly, services provided by an educational institution and prescribed courses offered by IIM have been extended an exemption under GST Specified services
received by education institution involved in pre-school education and higher secondary education have also been exempted.

While these exemptions would encourage the education sector, however these education institutions would still endure the GST burden on certain input supplies such as renting, telecommunication, event related expenditure, purchase of goods etc. These supplies would be still be an input tax cost for education institutions. This sector does look forward to a GST exemption in respect of the all expenditures incurred so that the input tax cost does not impede a sector which deals with a fundamental constitutional right.

Training services provided by commercial coaching entities would continue to attract a GST at the rate of 18%. The training services provided by these commercial institutes would still be subject to GST under a performance based principle. Another area of concern for the education and training sector is the taxability of educational events organised by a foreign based entity in India.

Another area of concern for the education and training sector is the taxability of educational events organised by a foreign based entity in India.

Accordingly, these foreign entities organize educational training events in India which is attended by individuals, participants from business entities and overseas participants as well and would become liable to GST.