Education sector plays a vital role in shaping the future of the nation. Taxing this sector has always been a complex issue. As we all are aware, a majority of services in India are under the purview of GST. However, understanding the sensitivity and importance of the education sector, the GST Act has tried to maintain a fine balance whereby core educational services are exempt from GST, and other commercial education services are taxed at a standard rate.
Interestingly, the term ‘Education’ is not defined in the CGST act. However, as per the Apex Court’s decision, we can agree that ‘Education is the process of training and developing the knowledge, skill and character of students by normal schooling.’.
Digital Learning through online courses has become a new trend. In this article, we will discuss the taxability (under GST) of Educational Services provided digitally (online courses).
Educational services that are taxable under GST are:
- Commercial training and coaching services,
- Services provided by the Indian Institutes of Management, by way of the Executive Development programme and services not explicitly exempted,
- Certification courses, online or otherwise, offered by various educational institutions/Universities,
- Services provided by an educational institution for obtaining a qualification not recognised by any law for the time being in force.
The Government exempts various educational services. Some of the exempted services are:
- Services provided by a recognised educational institution to its students, faculty and staff are exempt from GST. This means educational institutions providing:
- Pre-School to Intermediate education,
- Qualification recognised by any law for the time being in force,
- Approved vocational education courses are exempt from GST.
- Services provided by educational institutions by conducting entrance examinations against consideration (in the form of an entrance fee) are also exempt from GST.
Online Information Database Access and Retrieval (OIDAR) services are a bundle of services that are provided through the medium of internet and are received by the recipient online without having any physical interface with the supplier of such services. However, ‘Educational or professional courses, where the content is delivered by a teacher over the internet’ is explicitly excluded from the OIDAR services list.
From the above points, we can infer that online courses are not OIDAR services. They are Education services that will be classified under the Heading 9992. As of today, online courses are not explicitly exempted from GST. These services are taxable at the rate of 18% ( 9% CGST + 9% SGST).
- Services provided by way of education as a part of a prescribed curriculum for obtaining a qualification recognised by a law of a foreign country is taxable under GST.
- Private coaching centres or other unrecognised institutions cannot avail exemptions available to educational institutions. These services are taxable under GST.
- GST should be paid by the supplier of services (institute/centre providing taxable education services).
Recruitment fees charged by educational institutions are taxable.