Education is one of the key sectors for any economy. The skill, training and education of a country’s manpower go a long way in deciding how the economy of that country will flourish.
Education promotes understanding, creativity, out-of-box thinking, vision and productivity of people which helps in the advancement of a country. The more knowledgeable the human capital of a country is, more are its chances of development. In India, education is provided both by public as well as private sector.
As far as the government is concerned, its foremost priority is to provide low cost education to one and all. This is why education sector currently enjoys a lot of tax exemptions. The services as provided by schools and colleges are either not taxed or are in the negative list.
After implementation of GST regime, similar situation is likely to continue with the tax exemptions for the sector being retained.
However, one factor needs consideration and that is the tax paid on inputs.
In the present scenario, the costs of services already include 6-7% of tax components for which input credits are not available. Once the GST would be implemented and tax rates will be enhanced, this tax component will increase by 2-3% resulting in an increase of cost of services to the end user.
Therefore, in order to provide real benefit to the education sector, the taxes to be paid on inputs must be done away with so that even if GST comes into force, the total cost of education will be lower than what it is today. The idea of zero-rated tax on inputs must be thus, explored.