Goods and Services Tax Implications for Printing Educational Answer Materials
This article explores the application of Goods and Services Tax (GST) to the printing and supply of educational answer booklets and copies. It outlines the classification of these activities as a supply of goods, detailing applicable HSN codes and tax rates. Furthermore, the piece discusses the GST composition scheme for small taxpayers, highlights specific exemptions and valuation methods, and analyzes key advance rulings that clarify the distinction between mixed and composite supplies, and goods versus services in this context.
Goods and Services Tax Implications for Printing Educational Answer Materials
This article examines the application of Goods and Services Tax (GST) to the production of answer booklets and answer copies, along with relevant advance rulings on the subject.
Understanding Supply under GST
Under the GST framework, "supply" encompasses various transactions such as sales, exchanges, transfers, barters, leases, licenses, rentals, and other similar dealings conducted for consideration in the course or furtherance of business. Consequently, the act of printing and providing answer booklets, whether with or without OMR features, to educational institutions for a fee is categorized as a "supply of goods" for GST purposes.
Applicable Tax Rates and HSN Codes
The table below outlines the Harmonized System of Nomenclature (HSN) code and corresponding GST rates for these goods.
| HSN | Goods | CGST | SGST |
|---|---|---|---|
| 4820 | Supply of various exercise books, graph books, notebooks, and other stationery items | 6% | 6% |
GST Composition Scheme for Small Taxpayers
Smaller businesses have the option to simplify their GST compliance by enrolling in the composition scheme. Taxpayers with an annual turnover below Rs. 1.5 crore can opt for this scheme, allowing them to pay GST at a fixed percentage of their turnover. However, a significant drawback of choosing the composition scheme is the inability to claim Input Tax Credit (ITC) on raw materials like paper and ink used for printing answer booklets.
Exemptions and Valuation Guidelines
Exemptions
OMR sheets and answer copies are subject to GST, and there are currently no available exemptions for their supply.
Valuation
Generally, the value of a supply for GST calculation is the monetary amount the buyer pays to the seller for goods or services. For instance, if Company A prints answer copies with an educational institute's logo and supplies them, the GST calculation would be:
- Sale value: Rs. 1,000
- GST (12% on 1,000): Rs. 120
- Total value: Rs. 1,120
Insights from Advance Rulings
Distinguishing Mixed and Composite Supply
Applicant: Vardhman Infotech
Case Details: Vardhman Infotech, a company involved in supplying answer booklets bearing the logos and names of educational institutions, sought an Advance Ruling to clarify whether their service constituted a mixed supply or a composite supply.
Ruling by Authority: The Advance Ruling Authority (ARA) in Uttar Pradesh referenced Circular No. 11/11/2017- GST dated 20th October 2017. This circular specifies that providing books, brochures, or other printed stationery with a logo should be treated as a composite supply. The ARA noted that while the logo belongs to the recipient, the physical inputs (like paper) are owned by the printer. Printing was identified as the primary service in producing logo-branded answer booklets, thus categorizing it as a composite supply taxable at 12%. A "principal supply" is defined as the predominant element within a composite supply, with other components being ancillary.
Classifying as Supply of Goods or Services
Applicant: Markk Business Private Limited
Case Details: Markk Business Private Limited, which supplies answer booklets (with or without OMR capabilities) to educational institutions using its own raw materials, applied to the AAR to determine if their activity should be classified as a supply of goods or a supply of service.
Ruling by Authority: The ARA in Rajasthan determined that if the printing process itself imparts the essential character to the final product, it is a supply of service. Conversely, if the product's ultimate use defines its essential character, it is considered a supply of goods. In this particular instance, the ARA concluded that the usage of the answer booklets dictated their essential character. Therefore, the printing and supply of answer books with logos fall under Chapter 4820, entry number 123, and are taxable at 12%.
Common Questions Regarding Printing and GST
Are printed answer sheets with or without OMR taxable or exempt under GST?
These items are taxable under GST at a rate of 12%.
How is the printing of answer booklets categorized under GST?
Answer copies are blank books, often lined, intended for examinations. Their function is similar to notebooks. Consequently, they are classified under Heading 4820, entry 123 of Schedule II.