18% GST applicable on Affiliation Services Provided by Universities to Colleges: CBIC [Read Circular]

The Central Board of Indirect Taxes and Customs  ( CBIC ), vide circular no. 234/28/2024-GST dated 11th October 2024, has clarified that an 18% Goods and Services Tax ( GST ) applies to affiliation services provided by universities to colleges. These affiliation services are exempted from the GST notification  No. 12/2017-CT(R) dated 28.06.2017

Applicability of GST on the service of affiliation provided by universities to colleges

Affiliation services involve an evaluation by universities to determine whether colleges meet specific criteria necessary to conduct degree programs. These criteria include assessing the institution's infrastructure, such as available space, technical capabilities, financial stability, and faculty qualifications. The affiliation process ensures that colleges are adequately equipped to deliver quality education and meet the standards set by the universities.

Importantly, the affiliation services provided by universities are distinct from activities related to student admissions or the administration of examinations at the colleges. The core function of these services is to monitor and validate the capabilities of the educational institutions rather than directly facilitating student enrollment or examination processes.

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In light of this distinction, the 54th GST Council meeting recommended that the affiliation services offered by universities do not fall under the exemptions listed in Notification No. 12/2017-CT(R) dated June 28, 2017. Therefore, universities are required to charge an 18% GST on the fees for affiliation services provided to their constituent colleges.

The CBIC clarifies that “Thus, as recommended by the 54th GST Council, it is hereby clarified that the affiliation services provided by universities to their constituent colleges are not covered within the ambit of exemptions provided to educational institutions in the notification No. 12/2017-CT(R) dated 28.06.2017 and GST at the rate of 18% is applicable on the affiliation services provided by the universities.”

Applicability of GST on the service of affiliation provided by Central and State educational boards or Councils, or other similar bodies, to schools:

Further, CBIC also clarified that services of affiliation, provided to schools by Central or State educational boards or councils, or other similar bodies, by whatever name called, are taxable. Further, as recommended by the Council, the payment of GST on the services of affiliation provided by Central and State educational boards or Councils, or other similar bodies, to all schools is regularised on ‘as is where is’ basis for the period from 01.07.2017 to 17.06.2021.

Affiliation involves monitoring and ensuring that schools meet essential requirements such as infrastructure, financial stability, and faculty strength to operate under the respective boards or councils. Notably, these services do not pertain to student admissions or examination conduct.

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During the 54th GST Council meeting, it was recommended that all affiliation services provided to schools by Central or State educational boards, councils, or similar entities are taxable. However, services rendered to government schools—established or controlled by government authorities—will be exempt from GST, effective October 10, 2024, as per notification No. 08/2024-Central Tax (Rate).

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