Impact of GST on education sector

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.

3 thoughts on “Impact of GST on education sector

  • I totally agree with this article. All the input services should be considered as zero rated services under education. Though a section in the government ( Mr.Arvind’s Panel) feels that education is for the rich alone hence the inputs should be taxed, it has failed to capture that taxing this will only hurt the middle and the poor class who with great difficulty take up the task of educating their children.

    I hope the GST council will recognize this and do the best for the students at large.

  • The government should be very clear about its intention about taxation on education. It is already complicated due to several changes in earlier budgets. Education is a noble work. For giving good education, management needs funds also. If private colleges will also charge like government, they will not be able to provide world class education. Hence, education sector should be fully exempted from any kind to tax. No income Tax, No service tax of GST on any input or output service. Government may restrict fund flow thats is funds should not be used out of education purpose. Define that all service pertains to education, mess, hostel, transport or any service required to run the education institute should be fully exempt from any kind of tax. Let put check that money is not diverting any where and money is not spend anywhere except defined education and other related services. Keep this secotor away from taxation only then the funds will flow for education sector and a big educated force will be ready to take charge of country and serve internationally. Even there will be exemption from Income Tax if black money is spend in education sector. Let the black money should go in education sector.


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