Understanding GST on Educational Offerings: Rates, Scope, and Sectoral Effects

Educational institutions fulfill a vital role by preparing individuals for a brighter future. Comprehending how the Goods and Services Tax (GST) impacts the services offered by these academic bodies—including schools, colleges, and professional training centers—is crucial, as it directly influences financial considerations. This article provides a comprehensive overview of these implications.

Key Developments

Recent announcements from the 56th GST Council meeting, effective September 22nd, 2025, include significant changes:

• Stationery Products: GST on paper-based stationery items like boxes, pouches, wallets, and writing compendiums has been reduced from 12% to 5%.
• Educational Stationery Exemption: Pencils, crayons, pastels, drawing charcoals, and chalk are now fully exempt from GST, reduced from 12% to NIL.

Historical Tax Regulations for Educational Institutions

Before the implementation of GST, services provided by educational institutions to their students, faculty, or staff were generally exempt from service tax. This exemption was outlined in Mega Service Tax Exemption Notification Number ST-25/2012, dated June 20th, 2012.

Effective April 1st, 2014, the scope of this exemption was narrowed. It became restricted to specific services offered to institutions providing pre-school education and education up to higher secondary school levels. These specified services included:

• Student, faculty, and staff transportation.
• Catering services, including government-sponsored mid-day meal programs.
• Security, cleaning, and housekeeping services provided within these institutions.
• Services related to admissions or the conduct of examinations by such institutions.

Any other services provided to educational institutions, beyond those listed, were subject to taxation. Furthermore, services rendered to institutions that did not fit the definition of providing pre-school to higher secondary education were also taxable.

Definition of an Educational Institution Under GST

Under the Goods and Services Tax framework, an "educational institution" is defined as an entity that offers services encompassing:

• Pre-school education and instruction up to the higher secondary level or its equivalent.
• Education forming part of a curriculum leading to a qualification recognized by existing law.
• Education as part of an officially approved vocational training course.

Tax Implications of Educational Services as Supply

A taxable supply refers to the provision of goods or services, or both, subject to GST. Certain services rendered by an educational institution to its students, faculty, and staff, or to another educational institution, are exempt from GST. These include:

• Transportation for students, faculty, and staff.
• Catering services, including government-supported mid-day meal schemes.
• Security, cleaning, or housekeeping services within such educational institutions.
• Services related to admissions or the conduct of examinations by these institutions, up to the higher secondary level.

While services originating from an educational institution may fall outside the GST purview, this is not always true for services acquired by an educational institution. The GST exemption on procured services applies exclusively to schools offering education from pre-school through higher secondary levels.

Conversely, any service provided to an entity not categorized as an educational institution (as defined above) is considered a taxable service. Coaching centers, tutoring services, and private tutorials are generally not recognized as approved vocational education courses or government-approved programs. Consequently, these services are typically subject to an 18% GST rate.

GST Exemptions for Educational Institutions

Several exemptions are available under GST for educational institutions:

• Charitable Trusts: Educational income is entirely exempt if a charitable trust operates a school, college, or educational institution for disadvantaged groups, such as abandoned children, orphans, homeless individuals, physically or mentally abused persons, prisoners, or rural residents aged 65 or above.
• Government Entities: Education activities conducted by the government, local authorities, or governmental bodies are exempt from GST, as these are not classified as commercial supply of services (e.g., government or municipal schools).
• Skill Development Programs: Education provided by certain entities is also exempt under GST, including:
  • The National Skill Development Corporation (NSDC) established by the Indian government.
  • Sector Skill Councils approved by the NSDC.
  • Assessment agencies approved by the NSDC.
  • National Skill Development Programs sanctioned by the NSDC.
  • Vocational skill development programs approved under the National Skill Certification and Monetary Reward Scheme.
  • Any scheme implemented by the NSDC in collaboration with training partners.
• IIM Programs: Services provided by the Indian Institutes of Management (IIM) are also granted exemption for:
  • Two-year full-time residential Post Graduate Diploma in Management (PGDM) programs, where admission is based on the Common Admission Test (CAT).
  • Fellowship programs in Management.
  • Five-year Integrated Programs in Management studies (excluding Executive Development Programs).

GST Rates Applicable to Education Services

The following table summarizes the GST rates for various types of education services:

GST Registration Requirements for Educational Institutions

• Educational institutions offering only educational services, where fees are subject to a NIL GST rate, are generally not required to register for GST.
• However, if an educational institution also provides other taxable supplies or services, such as distributing books, shoes, or uniforms to students, it may be liable to register for GST.

GST Applicability to Higher Educational Institutions

Services supplied to higher educational institutions are taxable. Consequently, "input" services like transportation, catering, housekeeping, admission-related services, or examination conduct services procured by higher educational institutions will incur GST. This tax burden must be borne by the higher educational institution itself.

GST on Training Programs, Camps, Yoga, and Other Events

Training programs, camps, yoga sessions, and similar events are typically classified as commercial activities and are therefore subject to GST.

GST Coverage for Books and Stationery Distributed to Students

While the supply of books is exempt under GST, items such as uniforms, general stationery, and other non-academic supplies are taxable. Additionally, supplies provided by third parties, including musical instruments, computers, sports equipment, and extracurricular activities offered directly by external providers, are also subject to GST.

For further details on the taxation of food and accommodation services by educational institutions and coaching centers, you can consult articles on GST on food and accommodation service.

GST on Private Coaching Centers and Distance Education

• Private Coaching Centers: These institutions often lack a specific curriculum, do not conduct formal examinations, and do not award recognized qualifications. As such, they are taxable at a GST rate of 18%.
• Distance Education: Generally associated with higher education, distance learning programs are also subject to an 18% GST rate.

For instance, consider a scenario where a tutorial center provides coaching for Class 11th and 12th subjects, including JEE exam preparation. If a student enrolls in a Class 12th program plus JEE coaching with the following charges:

• Tuition fee: Rs. 48,450
• Books: Rs. 20,560
• Maintenance fee: Rs. 5,000
• Total Invoice Value (pre-tax): Rs. 74,010

The taxable value would be Rs. 53,450 (Rs. 48,450 for tuition + Rs. 5,000 for maintenance).

• CGST: Rs. 4,811
• SGST: Rs. 4,811
• Total GST charged: Rs. 9,622
• Total payable: Rs. 83,632 (Rs. 74,010 + Rs. 9,622)

Private tutors and coaching centers are required to file GST returns similar to other taxpayers. This typically involves GSTR-1 and GSTR-3B, filed either monthly or quarterly based on turnover and whether they opt for the QRMP scheme. If they are registered under the composition scheme for service providers, they must pay tax using CMP-08 and file GSTR-4 annually.

Impact of GST on the Education Sector

Education holds immense significance in India, given its large youth population. Ensuring affordable access to education is a critical objective. However, the implementation of GST has led to increased costs for higher education and distance learning programs. While schools initially received GST exemption, extending similar consideration to Higher Education Institutions (HEIs) could have mitigated this situation.