The education sector is one of the largest sectors in the Indian economy, providing education and employment to millions of people in the country. Considering the significance of education in the society and economy, wide tax reliefs were given to the education sector.
Though the services provided by the educational institutions are expressly immuned from taxation under the new proposed Goods and Services Tax, no tax relief is granted to pre-schools and other educational institutions up to higher secondary school or equivalent. These institutions will be charged with 18% GST under the new indirect tax regime.
Till March 2017, various services provided by all the educational institutions to its students, faculties and staffs were exempted from Service Tax according to the Mega Notification issued by the Government on June 2012. The services so exempted would included transportation of students/ faculty/staff, Catering, including any mid-day meals scheme sponsored by the government, Security or cleaning or housekeeping services performed in such educational institutes, Services relating to admission to, or conduct of examination by, such institution will not charged service tax on their invoices.
Recently, the Government had amended the above Notification the effect that the exemption was not available to the educational institution other than an institution providing services by way of pre-school education and education up to higher secondary school or equivalent. The amendment was applicable w.e.f 1st April 2017.
Under the GST also, the government continued the levy on such educational institution. This would consequently increase the cost of education in India.
