GST update on whether coaching institutes rendering professional courses taxable? 132/2020-21

We all know that certain educational services are exempt but not all institutions providing education are exempt from levy of GST. The recent Advance Ruling filed by M/S LOGIC MANAGEMENT TRAINING INDUSTRY also sought clarification as to the GST liability on educational services provided to students obtaining qualifications such as CA, ACCA, CS, CMA, CPA etc. Apart from this, it was also asked whether the applicant is liable to pay GST on the examination fees paid to various Institutes on behalf of their students who were not having online facility for payment of examination fees. The applicant also inquired about the GST liability on text books given by them to their students and the hostel facility provided to their own students and outside students. The decision pronounced by the Advance Ruling is the subject matter of discussion of our present update.
The AAR observed that the applicant is not approved by the Institute of Chartered Accountants of India/Institute of Cost Accountants of India/Universities to conduct coaching/training of students as per the syllabus prescribed by them to obtain qualifications granted by the said institution. Consequently, the applicant did not fall under the definition of ‘educational institution’ and so the education services provided by the applicant is not exempt from GST. It was held that the applicant is liable to pay GST under SAC 9992999293 pertaining to commercial training and coaching services.

As regards, the taxability of examination fees paid on behalf of its students was concerned, it was held that the said amount is included in the consideration for services as per provision contained in section 15 of the CGST Act, 2017 but if the conditions prescribed in Rule 33 of the CGST Rules, 2017 pertaining to pure agent are satisfied, there is no need to include the value of such fees in the taxable value of service.

Furthermore, with respect to taxability of hostel charges, it was concluded that the hostel facility when provided to students of the applicant will be bundled with the principal service of commercial training and coaching services and would be taxable accordingly. However, as regards hostel facility provided to outside students, the benefit of exemption contained in serial no. 14 of the notification no. 12/2017-Central Tax (Rate) dated 28.06.2017 could be availed which provides exemption to accommodation services where the tariff per day is below Rs. 1000/-.

Lastly, the AAR concluded that the supply of text books would be liable to GST as per the applicable rates.

This ruling is not new to the coaching institutes providing professional education to the students and similar advance ruling has been pronounced in the case of M/S MASTER MIND by Andhra Pradesh AAR wherein it has been ruled that supply of services of education to students for obtaining qualifications of CA and ICWA exams are not exempted services under Entry no. 66 of Notification No.12/2017-Central Tax (Rate) dated June 28, 2017, as amended by Notification No.2/2018-Central Tax (Rate) dated January 25, 2018.

It is submitted that the health services and educational services are exempt but levying GST on commercial and coaching institutes may defeat the purpose of exemption on educational services because in today’s world, professional guidance is essential for cracking the professional examinations and levy of GST on such coaching institutes only adds to the cost of learning for the student.

This is solely for educational purpose.
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GST update on whether coaching institutes rendering professional courses taxable? 132/2020-21

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