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How GST Tax Reform Will Impact The Education Sector and What All Extra Expenses are Expected to Add Up?

The Goods and Services Tax (GST) is believed to be the biggest tax reform in our country. Implemented on 1st July at the midnight, the bill was passed in the parliament in the presence of all the members and President Pranab Mukherjee.

GST is an integrated taxation system which is bound to eliminate the concept of multiple taxations. All the major and minor economic sectors will be influenced with this new taxation reform and so does the education sector. Education has always been a potential generator of revenue for the country and quality education is a catalyst for the country’s growth. Let us know how this tax reformation has impacted the education sector and what all expenses add up to your pocket.

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As the GST hits the education sector, there are certain services that will be tax exempted while the others will be charged. Some of the services that are exempted from the GST are listed below:

  • The training providers (Project implementation agencies) under Deen Dayal Upadhayaya training courses certified by National Council for Vocational Training
  • Assessing bodies empanelled centrally by Directorate General of Training Ministry of Skill Development and Entrepreneurship by way of assessments under Skill Development Initiative Scheme
  • Training activities relating to arts or culture or sports by charitable entities registered under section 12AA of Income Act, 1961
  • Services provided by Indian Institutes of Management for educational programs such as Post Graduate Programmes in Management, Fellow Programme in Management, Five years integrated program in Management, etc. except Executive Development Programme.
  • Services provided by an educational institution to its students, faculty, and staff.
  • Services by way of training or coaching in recreational activities like arts, culture, sports, etc.

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Services that are not exempted under the GST include:

  • The 12 per cent of the GST will be charged on the colouring books, exercise books, notebooks, and crayons.
  • The 18 percent of the GST will be charged on the pens and school bags.
  • Again, 18 percent of the GST will be charged on the coaching institutions helping students with competitive exams for the engineering, medical, and charted accountancy.

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Should parents be concerned?

This is a major question that most of the parents are asking. The child education is already cost-inclusive for the parents and the incorporation of GST is another scare. Should you be concerned? Depends on a lot of factors actually, as of now, the education from the primary to higher secondary and some vocational courses have been exempted from the GST.

However, the coaching institutions will be greatly under the burden of the GST. If your child is taking up a course from any such institution then you will have to pay a tax of 18%. Goods have also become expensive as a result of GST implementation; things related to the basic education will be charged tax up to 18% by the government.

Talking about colleges and universities, those that are recognized by the government won’t be levied any tax and others will be charged accordingly. The services such as transportation, catering, housekeeping, services relating to admission or conduct of examination to higher educational institutions will be charged from the student.

Hopefully, this write-up gave you an idea about how educational expenses will be changing from now onwards.



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