Education is one of the most important sectors for any economy. The country’s youth education will decide how the economy of that country will flourish. Education develops vision, understanding, creativity, and productivity of people which helps in the development of a country. Education is provided by two sectors public as well as private sector. The foremost priority of government is to provide low-cost education to all students. That’s why education sector enjoy tax exemption as they are not taxed or comes in a negative list. All educational services are covered under the GST (goods and services) tax-exempt list.
GST is short of goods and services tax. It applies to all kinds of goods and services that are consumed by the public. The customers will now be able to offload double taxation. This decision has affected many sectors starting from building raw material to the education in development.
Exempted education services under GST
The educational services exempted under GST are examination fees and assessment, curriculum related or course-related materials, trips related to the course of study or part of curriculum requirement except for accommodation and food supplied on those trips and student administrative services like registration, issuing or replacement of student card, printing of academic transcripts, late fee payments etc.
Non-Exempted educational services under GST
The services of education that are not exempted from GST are after-school activities offered directly by third parties, accommodation and food supplied for an excursion, supplies provided by third parties like computer, musical instrument, sports equipment, stationery and uniform and other non-academic related supplies.
The educational services directed by coaching and training foundations are also non exempted from GST. Let’s have a look at them.
1. Coaching institutes
As clearing entrance exam and competitive exam seems impossible without taking professional coaching, it is an integral part of education. GST has the elevated the tax rate to 18% from 14%^ for these coaching institutes. The parents whose children are about to start competitive exam coaching will be facing the inconveniences.
2. Higher education institutions and private institutions
The exemption has been granted under GST for preschools till higher secondary education. Since educational institutions and universities have not been mentioned in the exception list, 18% GST is expected to be charged on this. In the private segment higher education will end up being more costly and in turn, competition for admissions in a government school, colleges and foundations will increase. The middle-class families who get education loans on put their lifelong savings into educating their wards at reputed institutions will be facing the inconvenience.
According to the GST law, the education sector might experience both positive and negative impact on it. The school might not include any GST on the tax policy supplies but in order to make a little adjustment, the cost might increase in the event of taxable supplies later on. The tax rate might increase by 3-5%. If the government considers coaching to be essential it might reduce by few percentages.
Education is a prime necessity as it has been mentioned already and now students are left with no option but to pay an extra 3-5% to get quality education afterward. So the most negative impact will be felt by students opting for coaching classes in quest of better tutors.
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