Sl. Nos. 22(c) and 66 in the Table under Notification No.12/2017-Central Tax (Rate) dated June 28, 2017 (as amended) exempts GST on certain services to and by educational institutions. While the initial exemption entries were simple, insertion of provisos to Sl.No.66 ibid led to some difficulty in understanding by people who were not conversant with reading law. Hence, the purpose of this post is to simplify and briefly analyse the exemption entries related to educational institutions.
Meaning of Educational Institution
Before we embark on the exemption entries, it would be pertinent to understand the meaning of "educational institution". In simple terms, it comprises:
- pre-schools;
- schools providing education up to higher secondary or equivalent;
- institution providing education for obtaining a qualification recognised by law (for example, Bachelor of Commerce degree conferred by the University of Madras);
- institution providing an approved vocational education course.
While the first three categories are popular, the fourth category needs understanding. Approved vocational education course is defined to mean:
- a course run by an industrial training institute or an industrial training centre, wherein:
- such institute / centre should be affiliated to the National Council for Vocational Training / State Council for Vocational Training;
- such institute / centre should offer courses in designated trades notified under the Apprentices Act, 1961;
- a Modular Employable Skill Course, wherein:
- such course should be approved by the National Council of Vocational Training;
- such course should be run by a person registered with the Directorate General of Training, Ministry of Skill Development and Entrepreneurship.
Exempt Services by Educational Institution
| Recipient (with supplier being educational institution): | Nature of Service: |
|---|---|
| Students, faculty and staff of educational institution | Any service [refer note 1] |
| Any person | Conduct of entrance exam (but consideration should be in the form of entrance fee) |
Note 1 - The entry exempts any service by an educational institution to its students. A point to ponder is the taxability of application fee collected by an educational institution prior to admission. It should be noted that the candidate (who has paid the application fee) is not a student (but a candidate / prospective student) on the date of receipt of such fee.
Exempt Services to Educational Institution
| Recipient (with supplier being any person): | Nature of Service: |
|---|---|
| (i) Pre-schools; and (ii) Schools providing education up to higher secondary or equivalent | Security or cleaning or house- keeping (performed in such educational institution) |
| Catering (including mid-day meals scheme sponsored by CG/SG/UT) | |
| Transportation of students, faculty and staff | |
| Any person providing services of transportation of students, faculty and staff to: (i) pre-schools; and (ii) schools providing education up to higher secondary or equivalent | Giving motor vehicle (for transport of students, faculty and staff) on hire [refer note 2] |
| Educational institution | Related to admission to the educational institution |
| Related to conduct of examination by the educational institution | |
| Educational institution providing education for obtaining a qualification recognised by law | Supply of online educational journals or periodicals |
Note 2 - The issue of rent v. hire is hopefully put to rest with the issuance of Circular No.164/20/2021-GST dated October 06, 2021 unless the Revenue rhetorically claims that "hiring includes renting" is not applicable to Sl.No.22(c) since paragraph 8 of the said Circular does not refer clause (c).
