Effect of GST in the educational sector

1. GST ON EDUCATION SECTOR
• Goods and Services Tax (GST) is an indirect tax levied in India on the sale
of goods and services.
• Goods and services are divided into five tax slabs for collection of tax -
0%, 5%,12%, 18% and 28%.
• The tax came into effect from July 1, 2017 through the implementation
of one hundred and first amendment by the Government of India.

2. Brief on education sector in india
• In this era of 21st-century education is very important to survive and it
is a vital tool to succeed in this contemporary world.
• literacy rate of India drastically increased to 90.2% and this education
industry is valued around $97.8 billion dollars and compound annual
growth rate of 10.16%.
GST in education sector
• “Education”is not defined in the CGST Act but as per Apex Court
decision in “Loka Shikshana Trust v/s CIT”.
• The GST Act tries to maintain a fine balance whereby core educational
services provided and received by educational institutions are exempt
and other services are sought to be taxed at the standard rate of 18%.

3. Clasification and rates of educational services
• Education Services are classified in heading 9992 (as per Notification No.
11/2017-Central Tax (Rate)).
• 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.

4. IMPACT OF GST IN EDUCATION SECTOR
• Education and Training Industry will be impacted by GST and the impact
is elaborate in the following aspects
1. Tax Payment
2. Registration
3. Input Tax Credit
4. Returns
5. Refund

5. PLACE OF SUPPLY
• Section 5 of the IGST Act provides for the rules for determining “place
of supply” of goods in different circumstances.
EXAMPLE: ABC organizing a cultural event at Mumbai. Firm is
registered in Kolkata. D is a registered person in Delhi, provides his
services at Mumbai. Place of supply would be Kolkata. However if ABC
is not registered then POS would be Mumbai.

6. TIME OF SUPPLY
• In order to calculate and discharge tax liability, it is important to know
the date when the tax liability arises i.e. the date on which the
charging event has occured. In GST law, it is known as Time of Supply.
• Section 12, 13 & 14 of the Central GST Act,2017 (CGST Act) deals
with the provisions related to time of supply and by virtue of Section
20 of the Integrated GST Act, 2017 (IGST Act) these provisions are also
applicable for the IGST Act.
EXAMPLE:ABC receives an advance of Rs. 2500/- on 29.07.17 for
services worth Rs. 10000/- to be supplied in the month of September,
then it is deemed that ABC has made a supply of Rs. 2500/- on
29.07.17 and tax liability on Rs. 2500/- is to be discharged by 20.08.17.

7. REVERSE CHARGE MECHANISM
• Date of payment as entered in the books of account of the recipient
or the date on which the payment is debited in his bank account,
whichever is earlier
• Date immediately following 60 days from the date of issue of invoice
or any other legal document in lieu of invoice by the supplier.

8. COMPOSITE AND MIXED SUPPLY
• 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.
EXAMPLE: Where a course in a college leads to dual qualification only one of
which is recognized by law. Would service provided by the college by way of
such education be covered by the exemption notification? The answer is no
Provision of dual qualifications is in the nature of two separate services as
the curriculum and fees for each of such qualifications are prescribed
separately. Service in respect of each qualification would, therefore, be
assessed separately.

9. CLAIMING OF INPUT TAX CREDIT (ITC)
• The dealer should be in possession of tax invoice
• The said goods/services have been received
• Returns have been filed.
• The tax charged has been paid to the government by the supplier.
• When goods are received in instalments ITC can be claimed only when the
last lot is received.
• No ITC will be allowed if depreciation has been claimed on tax component
of a capital good
• A person registered under composite scheme is not eligible to claim input
tax credit
• Input tax credit is available for capital goods

10. COMPARISION OF PRE AND POST GST ON
EDUCATION SECTOR

11. CHALLENGES IN GST
• Change in Business Software
• GST Compliance
• Increase in Operating Costs
• Policy Change During the Middle of the Year
• Online Procedure
• Higher Tax Burden for Manufacturing SMEs
• No clarity on tax holidays

12. CONCLUSION