Govt issues Concept Note on Education Services under GST

The Central Government recently issued a concept note on the applicability of Goods and Services Tax (GST) on educational services.

Education Services are taxable under forward charge which means, tax shall be paid by the supplier of services.

“Education” is not defined in the CGST Act but as per Apex Court decision in “Loka Shikshana Trust v/s CIT”, education is process of training and developing knowledge, skill and character of students by normal schooling.

Under the new tax regime, Education Services are classified in heading 9992 (as per Notification No. 11/2017-Central Tax (Rate)) and are further sub-divided into six groups (as per the Annexure to the same notification) comprising of Pre-primary, primary, secondary, higher, specialised and other educational & support services.

Only such educational services are in the negative list as are related to delivery of education as ‘a part’ of the curriculum that has been prescribed for obtaining a qualification prescribed by law.

The concept note clarified that the services provided by way of education as a part of a prescribed curriculum for obtaining a qualification recognized by a law of a foreign country are not covered in the negative list entry. It said that to be covered in the negative list a course should be recognized by an Indian law.

With regard to the composite and mixed supply under the education sector such as boarding schools, it was said that “Boarding schools provide service of education coupled with other services like providing dwelling units for residence and food. This may be a case of bundled services if the charges for education and lodging and boarding are inseparable. Their taxability will be determined in terms of the principles laid down in section 2(30) read with section 8 of the CGST Act, 2017. Such services in the case of boarding schools are naturally bundled and supplied in the ordinary course of business. 

Therefore, the bundle of services will be treated as consisting entirely of the principal supply, which means theservice which formsthe predominant element of such a bundle. In this case since the predominant nature is determined by the service of education, the other service of providing residential dwelling will not be considered for the purpose of determining the tax liability and in this case the entire consideration for the supply will be exempt.”

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