Coaching Institutes to pay 18% GST on Composite Supply basis, says CBIC

The Central Board of Indirect Taxes and Customs ( CBIC ) has clarified that, Coaching Institutes to pay 18% GST on Composite Supply basis.

A coaching institute cannot deposit GST on individual items basis for the supply of notebooks, t-shirts, bags, sweatshirts, etc. to students along with coaching service.

In a weekly communication to officers and staff of the CBIC said that, “These types of bundled services fall under the category of ‘Composite Supply’ and attract 18 percent GST”.

Composite supply means a supply is comprising two or more goods/services, which are naturally bundled and supplied in with each other in the ordinary course of business, one of which is a principal supply. It means that the items are generally sold as a combination. The items cannot be supplied separately.

The CBIC Chairman’s observation has been made after on the background of the Alwar CGST Commissionerate has detected a modus operandi relating to short payment of GST on composite supply of Commercial Training or Coaching Services along with goods such as School Bags, Notebooks, T-Shirts, Sweat Shirts, Umbrellas etc. to their students. While the students were charged a lump sum amount for these services/goods, the Tax was deposited on individual supplies of bags, notebooks, etc. These types of bundled services fall under the category of “Composite Supplies” and attract GST at the rate of 18%. An amount of Rs. 3.6 Crore has been recovered in the case.

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