GST Applicability for Food and Accommodation Services Provided by Coaching Institutions
This article clarifies the GST applicability for food and accommodation services offered by private coaching centers in India. Advance Rulings indicate that these services are subject to an 18% GST rate, as coaching centers do not meet the definition of 'educational institutions' under GST law. Unlike recognized educational bodies, private coaching does not provide legally recognized degrees or certificates, making their services taxable at 5% for food and accommodation, without ITC benefits.
This article examines the Goods and Services Tax (GST) implications for private coaching centers and the associated food and accommodation services they offer. Several rulings by the Authority for Advance Rulings (AAR) indicate that these services are subject to an 18% GST rate.
Understanding Coaching Institutions and GST
Under GST regulations, an "educational institution" is specifically defined to encompass:
- Educational programs from preschool through higher secondary levels.
- Services forming part of a curriculum leading to a legally recognized degree or certificate.
- Approved vocational education courses.
A key criterion is that the services must be linked to a prescribed curriculum or necessary for obtaining a qualification recognized by law. Consequently, educational services that are part of a recognized curriculum or required for a legally acknowledged qualification are exempt from GST. In contrast, private coaching centers that offer preparatory training for exams, but do not issue legally recognized certificates or degrees, typically do not qualify as educational institutions. Therefore, a coaching institution lacking a specific curriculum or the authority to conduct examinations or confer qualifications falls outside the educational institution definition and is subject to an 18% tax rate.
GST Exemption for Accommodation and Food Services from Educational Institutions
Notification No. 12/2017, issued on June 28, 2017, outlines various services subject to a Nil GST rate. This list includes catering services provided by an accredited educational institution to its students. Consequently, any food and accommodation services offered by a recognized educational institution are exempt from GST.
GST on Accommodation and Food Services by Coaching Centers
Recent Advance Rulings clarify that GST is applicable to accommodation and food services provided by coaching classes. The Authority for Advance Rulings reasoned that the training offered by coaching centers is not mandated by any law and primarily aims to help students prepare for exams. Students can independently study and sit for these exams without attending a coaching class. Therefore, such coaching centers do not meet the definition of an "educational institution." The aforementioned notification exempts accommodation and food services only when supplied by an educational institution to its students. Since private coaching classes do not fall under this definition, their provision of accommodation and food services is subject to GST.
Valuation and GST Rate for Coaching Center Accommodation and Food Services
Under GST regulations, the "value of supply" is determined by the transaction value, which encompasses all taxes, cess, duties, fees, and other incidental charges, excluding GST itself. In this context, the value of supply will be the comprehensive fees levied on students for food and accommodation services. The applicable GST rate is 5%, without the benefit of Input Tax Credit (ITC).
Concluding Remarks
Based on the interpretation of GST provisions and related notifications, it is clear that private coaching centers do not qualify as educational institutions. Consequently, all services rendered by these coaching classes, including food and accommodation, are subject to GST.