National Education Body Demands Rollback Of 18% GST On Sector; Know GST’s Impact On Education

The Logical Indian Crew

November 9th, 2017 / 6:25 PM


Education Promotion Society for India (EPSI) approached the Centre on November 2, demanding a rollback of the Goods and Services Tax (GST) applied to various service providers in the sector.

EPSI is the national body that represents a wide spectrum of the education sector and education service providers. An EPSI delegation submitted a memorandum to both Finance Minister Arun Jaitley and Minister of State for Finance Santosh Gangwar, informing them of the serious implications of GST levy being imposed on outsourced services in the sector – transportation, security, hostels-mess and canteen, training, medical services, shops and admission-related services etc.

GST has been imposed on different services provided by higher education institutions (HEIs) and universities (both private and public) w.e.f. 1 July 2017. “Since these services are currently paid by users directly to vendors, GST levy will create financial burden on them and also lead to escalation of the cost of higher education,” said EPSI in a recent notification.

“The EPSI’s delegation also explained to both ministers that imposition of levy on outsourced services in many cases will be detrimental to the quality of higher education. HEIs will be forced to stop outsourcing and do it in-house. The management of universities and colleges will unnecessarily be bogged down in managing these services which do not come into their core competencies viz. higher education,” it added.

Taxing the Education Sector has always been a sensitive issue, as education is seen more as a social activity than a business one. The government has a constitutional obligation to provide free and compulsory elementary education to every child. Thus, to promote education, it would be beneficial if educational services are exempted from tax, says the Central Board of Excise and Customs (CBEC) under the Government of India.

However, it also added that commercialisation of education is also a reality. “The distinction between core and ancillary education is blurring and education is now an organised industry with huge revenues,” reads a notification by the CBEC.

Core educational services provided and received by educational institutions are exempt and other services are sought to be taxed at the standard rate of 18%, it continued.

The earlier tax was 15%.

Currently, these services attract 18% GST under the new tax regime:

  1. Higher Education Institutions and Private Institutions
  2. Coaching Institutes
  3. Cost of Organizing Events – Any educational/training events organized in India by foreign entities which are attended by professionals, individuals and overseas participants.

Other items were GST is imposed: colouring books, exercise books, notebooks, crayons will be 12% whereas, for pens and school bags, it would be 18%.

However, no GST will be applicable on annual subscription/fees charged as lodging/boarding charges by such educational institutions from its students for hostel accommodation, reported India Today.

There have been contrasting responses to the 3% increase in tax. “Education is a bare necessity today and students are now left with no choice but to pay more to get quality education. Other concern is that there are many students who don’t come from financially strong backgrounds, increased taxes may affect them badly. My own perception certainly is that education sector as a blanket should have been either left free of GST or not charged more than a 3, 4 or 5 per cent tax,” said Naveen Chopra, Chairman, Education counselling firm The Chopra’s, reported NDTV.

However, CP Shrimali, Acting Director, MDI Gurgaon, said, “I don’t think a rise of 3 per cent in college fee or tax will make that big a difference to students or colleges alike. In the long term, I think colleges can pass on the benefit to students in the form of no fee hikes, which were otherwise around 7-8 per cent yearly, due to inflation.”

Education is one of the most valuable services a nation can provide to its citizens. Not only should it be available and accessible but also economical. An increase of tax might have an adverse impact on financially backward students who opt for private institutes or coaching centres for further guidance. The Logical Indian community hopes that the government takes into account the issues raised by EPSI and comes to a decision which works best for students.


Written by : Pooja Chaudhuri

Edited by : Pooja Chaudhuri

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