GST: Private schools want education as zero rated service
The Association of Progressive Schools (AoPS) have written to the GST council demanding classification of education as ‘Zero rated service’. To overcome many issues faced by the schools due to exemption clause in the GST Act, the AoPS, which has more than 40 private schools as its members, has sought the exemption to be withdrawn on all input services.
Letter written by Manan Choksi, President, AoPS stated that Part B of the exemption notification provides an exemption to some of the services like catering, transportation, meals, security, cleaning staff, etc provided to educational institutions by service providers. Even though the output services are exempt along with some input services in Part B, other services are taxable. This is creating some issues for schools.”
Elaborating more on the same, Choksi said, “One challenge that most of the schools are facing is on the classification of the services received by the school. For instance, whether services received by the school can be classified as cleaning and housekeeping services or security services or transport services. If services are classified as manpower supply services, GST becomes payable on the same. On the other hand, if the service is classified as cleaning and housekeeping services or security services the same will be exempt from the levy of GST. If a vendor is providing services to schools which are exempt from the levy of GST then the vendor is typically providing taxable and non-taxable services. Because of this, many times vendors are providing separate enterprises only to provide services to the school.”
“Some of the vendors are collecting GST from schools but there is no mechanism available with us to check if the GST is paid by the vendors to the Government. Since the school is not filing any GST return, the counter check is also not available”, he added.
Through the letter, AoPS have urged council members to consider classifying education as a zero-rated service and not an exempt service and withdraw exemption on all input services. This would imply that education will continue to be an exempt service and all schools will have to file GST returns to claim a refund of GST paid on input services, the letter read.
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