A Mumbai-based coaching institute, Simple Shukla Tutorials, moved to the state AAR seeking clarification if GST was applicable on coaching fees. In its reply, the government clarified that 18% GST would be applicable on fees of coaching classes, a ruling by the Maharashtra Authority for Advance Rulings (AAR) said, as reported by The Times of India.
Rajendra Shukla, the owner of Borivili-based Simple Shukla Tutorials, sought a ruling to determine whether providing entrance coaching for medical and engineering entrance exams to classes XI and XII students comes under the ambit of GST. Shukla stated that government Notification 12, dated June 28, 2017, provided that services rendered by an educational institution to students would be taxed at ‘nil’ rate, in which the terms ‘education’ and ‘institution’ had not been provided in the GST Act.
However, the Central Board of Excise and Customs (CBEC) had stated earlier that neither private coaching centres nor any self-styled unrecognised educational institutions will be treated as educational institutions under GST and thus cannot avail exemptions. CBEC had said that as training does not lead to the grant of a recognised qualification, hence, private institutions are not covered under tax slab of GST act.
The exemption notification covered educational institutions who had fixed curriculum and resulted in students obtaining a qualification recognised by law. The AAR bench pointed out that since the coaching class did not have any specific curriculum and did not conduct any examination or award any degree or qualifications recognised by law, the activity of coaching centres is not covered by the particular definition provided for interpretation of the exemption notification.
According to Financial Express, core education services are exempt from the GST while 18% tax will be levied on other education services with “full admissibility” of Input Tax Credit (ITC) for such taxable services. For such private institutions and private players, some of the input services like canteen, repairs and maintenance will be taxed under GST as was during the pre-GST era.
Vinay Kumar, MD, Rao IIT Academy, said the 18% GST is not just a burden on parents, but also for the students. “GST was applicable from July last year, and it increased the total fees to some extent,” he said to The Times of India.
Narendra Bhambwani of the Maharashtra Class Owners’ Association told The Times of India, “a parent, whose child is studying in a coaching class for only five years starting from school, will end up paying a tax of Rs 1 lakh if the fees are moderately charged”.