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    12 views17 pages

    Clarification On GST PDF

    Uploaded by

    Rajesh Talati

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    © All Rights Reserved
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    5115125, 243 Pa {GST On Edveationa Insitutions (Goods and Senices Tax tps tagumuincalagoryigoods-and-servacia))» Aric (hips axguuintypelarises!) onal Institutions (https:/taxguru.in/goods-and-service-taxigst-educational-institutions.btml) 4y (htps:iMaxgurin/authorgectanjaiveddybobba/) | oes Tax hitpsstaxguruivcategorylgoods-and-service tax) Ailes (hos itaxguru.intypelsrtcles!) own infwp-admin/post php?post=793576&action-edit) 08 Nov 2021 (hos:Maxgurin/2021/11/08/) < 83,018 View tpstexgurnigoods-and-sorvice-taxlgst-educationa-nstitutionshmifpcommants) ‘enament in prosperity and a roluge in Adversity" Aristotle an important role in any economy as the education ofthe county's youth wil decide how the county will has always been a sensitive issue, as education is seen more asa social actviy than a business one. There ‘exemptions fo educational nsituiion in regard to GST. ‘yaltempt fs made to ensure thatthe core educational eervces ae fly exempt fom GST. ‘eation no. 12 CTR dated 28" July 2017 (htps:ltaxguruinlgoods-and-service-axlnotiy-exemptions-sup s provided — ‘cational instuton ois students, facuty and sta (@) by an educational inttution by way of conduct of entrance examination against consideration in the form of entrance fae Explanation: Sarvices provded by an educational instution to ts studants shal be exempt, itis Important to note the folowing points: + Educational services provided by an educational instution shall be exempted ony tthe services are provided to its students, faculty or stat ‘+ Exemption shall be applicable only on supply of services to student and not on supply of goods to students. + To claim exemption the services must be provided to is students, staff and faculty, exemption shal not be applicable ifthe services are provided to tho students, staff or faculy of other educational institution, (oan educational insttuton, by way of, — (i Transportation of students, faculty and staff (i) Catering including any mid-day meals scheme sponsored by the Central Govemment, State Government or Union tertory (i) Socutty or claning or house-keoping sorvices performed in such educational institution hnps:Mlaxguru inigoods-and-servce-talgsteducationalinsttuions himl "7 5115125, 243 Pa {GST On Edveationa Insitutions (iv) Services relating to admission to, or conduct of examination by, such instution (3) Supply of anne educational jourals or periacicals Provided that nothing contained in sub-tems (),(l) and (li) of tte (c) shall apply to an educational instution other than an insttuton providing services by way of pre-school education and education up ta higher secondary school or equivalent Provided fuer that nothing contained in sub.tem (of item (c) shal apply to an institution providing services by way of (i)pre-school education and education up to higher secondary school or equivalent; or (i) education as apart ofan approved vocational education course. ‘Summarised in the below table: 'SNo Type of educational institution Exemptions avallble wr to services provided to 1. Fdyeaoalinstuion providing vTranspaation of stents, faculty and sta ‘pre-school ecucation and \ Catering, inuting ary mi-day meals scheme ‘education upto higher secondary gponsorad by the Cantal Government, State school or equivalent (Goverement or Union tarry Secutly oF deaning of housexeoping semiees psfomedin such educational estate ¥ Sones reaing to admission to, oF conde of sxaminaten by such ratuton 2. Edyeaonalinsttulonprowdlng__v Series relting to eamision t,o conduct of ‘dueaton a apr ofa ‘rarnaon by suchinstulon ureulam fr abating 2 \ Supply of erin educational jours or prioial recognised qualieaton 3. Edueaonalinstaion providing _v Services esting ts saison t,o conduc of ‘education at prt of approved exainaton uy, sch neaon, ‘ocatona edication course ‘Analysing definition of educational institution: ‘Since exemption wih respect to said services is available only when thet analyse the term EDUCATIONAL INSTITUTION. services are provided byito ‘educational institution, itis important to Educatonalinstuion means ‘aninstuen providing services by way of education as a pat ofa e-chool edveaton and ecaton 2s a part cariglum for obtaining Sanaa ‘etucationuptoner | | | cltealon eonyised by ‘sewmaay shod || aston ecsea by qe art eb + Preschool education and education up to higher secondary schoo! or equivalent Ths includes education up to 12! class provides by any instution whlch offrs both Indian and Internationa slab hnps:Nlaxguru.inigoods-and-servce-tadgsteducationalinsttuions himl an7 5115125, 243 Pa GST On Educational Insitutions + Education a8 a part of curriculum for obtaining a qualifiestion recognised by any law ~ educatonal services provided to obtain {qualficalon which is part of curriculum (te subjects comprising a course of study in a school or college) recognised by any Indian law shall be an educational nsttuton, thats any colege, insiution or university which grants qualification on providing education as a part of cuticulum shall be treated as educationalinstituton Hence private coaching insiutions shall not be covered under educational Isblurion as they cannot grant qualiaton preseribed undor any law forthe tie being in fore. + Education as a part of an approved vocational educational course ~ In tems of explanation to Notification no. 12 CTR dated 26" July 2017 (hitps:ftaxguruingoods-and:-senvicetaxinoity-exemptions-supply-services-cgst-acthiml) approved vocational educational 1) A course run by an industrial training instition or an industil traning centre afftated to the National Council fer Vocational Training oF State Council for Vocational Training offering courses in designated trades noted under the Apprentices Act, 1961 (52 of 1961); or ) A Modular Employable Skit Course, approved by the National Counel of Vocational Training, run by a person registered with the Directorate General of Training, Ministry of Skil Development and Entropreneurshio, Training given by private coaching institutions would not be covered under educational institution as euch training does not lead to grant of a recognized qualifcation. “Taxabilty with respect to services provided by an educational institution: Al kind of services provides by an educational insttuton to its students, faculty or staff are exempt, provided that the supplies made are services and the sorvices are provided tits students, faculty or stat ‘Summary of sorvices provided by an educational institution along withthe taxabily Service coaching fe ‘Tein tee Sale of saionery Sale of notebooks Sal of unr Any ote sevens cern pay pcg eseay amptet Hostal oe er ty to pares Bundled. vices provided by Provided to student stat oc acuty students te studonts he students staan Saal o tat be studonts Is students faculty or tat ‘Ary person (ener than ss susan a facut) hitps:taxqurivgoade-and-service-taxiget-educationalnsttuions him! Taxabity evens cxonst Exempt as roated 35 composite supply — fer bel xclanaton) Exempt as roated 3s ‘composite suppl efor below ‘xclanaton) composi suppl refer bolow ‘excanaton) exerst cxonst Tbe than Rs. 10007 por ay Tosable if declared tan more than Rs. T000% per day anr 5115125, 243 Pa GST On Educational Insitutions Bundled services means bundle of provision of provision of various serviees wherein element of provision of ane service is combined with tloment or element of provisions of any other services. Naturally bundled: if various olements of services are bundid together In the ordinary course of business, t shal be treated as provision of Single service which gives the bundle is essential character. How to determine whether vices are naturally bundled: To determine whether services are naturally bundled depends on the practices followed by the industry, the following factors would help to detocmine the same ‘+ Whether itis common practice inte industry to provide such services in bundle, + Al such services togethor as a bundle are required fer providing the main service and sarvica receiver reasonably expects such services to be provided in a bundle + Ifthe nature of services is such that one of the servicus isthe main service and all ther services help in better enjoyment of a main service. + All services are advertsed as a single package. + Ils not possibie to provide services incvidvally Composite supply: means a supply is comprising two or more goodsservices, which are naturaly bundled and supplied in with each ater in the ordinary course of business, one of which isa principal supply. Taxabilty Is determined based on principle supply. The tax applicable tothe Principle supply will apply tothe whale supply. Mixed supply: means two or more Individual supplies of goods ar services, or any combination there, made In conjunction with each other by 8 taxable person fora single price where such supply does not constitute @ composte supply. a mixed supply comprising two or more supplis shallbe troated as a supply ofthat supply which atracts the highest rate of tax. ation institution generally provides educational services as bundle which includes + Feo for coaching + Hostel fe (f boarding) + Canteen fe (boarding) + Extracurricular actives Like sports, dancing et., + Salo of textbooks, notebooks, stationary el. Hostal fe, canteen fee and extra-cuculum activites are provided tos students and the educational institution cannot provide such services alone to outsiders and such services are offered as a package and they are provided fr the overall wlbsing ofthe students, it can be sai that such services are naturally bundled and supplied in the orcinary course of business. Therefore, the bundle of services will be treated as consisting entirely ofthe principal supply. Since the education servceis predominant, entire service willbe treated as a composite supply andthe taxabilty wil be determined as per the principle supply, which is education service, Hence the entire oundle of service is exempt. 1 extra bing (Le. ,not as a part and parcel of education) is being done, it may be a case of aticial bundling of two diferent supplies, not supplied together inthe ordinary course of business, and therefore wil be treated as a mixed supply, attracting the rate ofthe higher taxea ‘component fo the ent consideration However, all he services provided by an educational inttution to is students are exempt all the services whether assessed separately ot together as a bundle are exempt If a course in a college leads to dual qualification only one of which is recognized by law would the service provided by the college by way of such ‘education be covered in this enty? Provision of dual qualicatons is wo separate services as the curiculum and fees for each of such qualifications are preserbed separately. Srvieo in respect of each qualification would, therefore, be assessed separately “Taxabilty with respect to services provided to an educational institution: 1) Renting of schoo! bus to an education institution: ‘Services provided by way of renting of schoo! buses i able to tax since the above entry covers transportation services ony, n the instant case, itis of renting of motor vehicles 2) Catering vices provided to educational institution: Whe ducaioral instluton outsources the catering actvly to an outside contacter, then it Is a supply of service to the concemed educational institution by such outside caterer. Catering services provided to an educational institution shall be exempted only If such services are provided to an educational institution providing pre-school education and educaton up to higher secondary school or eauivatent Which is summarised as follows: hitps:taxguranvgoade-and:-service-taxiget-educationalnsttuions him! ant 5115125, 243 Pa GST On Educational Insitutions Service provided to Taxabitty Eaycatonal stun providing educabon 8.2 Texable far ofa cuca for tain a recognised an of approved vocatonal educational cures Eyota insti proving pe school Exempt ‘schooler equate 3) Supply of fixed assets tke sale of benches, projector, furniture etc, to an educational institutior Fhied assets supplied to an educational institution is taxable as # educational inttuton ‘exemption entry is applicable only on services provided to an 4) Advertisement services provided to an educational institution: Educational inaftuton procures services from advertising agencies for promoting ther brand or insittion, such advertisement services shall be taxable as the same isnot included in the exemption enty. 5) Services like Karate, Music, Swimming provided directly tothe students of educational institution In terms of exemption entry services provided by an educational inslution to its students is exempt, however the exemption shall not be applicable isthe services are provided by a thic-party service vendor directly tothe students, It consideration for such services Is pald by students to the educational Institution which in tun Is pald tothe third-party services provider— von if consideration is routed trough educational inlitution, it can be sais thatthe service is provided direct to the sludents ané not to the educational nstition, As the defntion of consideration includes payment mad by any ther parson other than instution which means that consideration can be route frm thi person, 6) Sale of Books, Uniform, Stationary to an educational institution: Sale of books, uniform and stationery to educational institution is taxablefexempt based on their classiiaton (HSN) 7) Admission services to educational institution: ‘Admission services that is services such a8 envoling students is exempted, 8) Lunch management services/Transport management services provided to an educational institution: Lunch management services such as food items fo be included in menu, arranging food to the students, arranging platesilables and transport management services such as arranging time slots for pckingidropping students, supply of drivers et, fs taxable as such services will not be covered under catering (As it does not involve supply of food) and transportation services (as vehicle isnot rented by the supplier only management services are provided) 9) Campus placement services provided to educational institutions for securing job placements forthe students Campus placement services provided fo an educational instil ace taxable a the same are not covered in the exemption ent. 410) Renting of bullding to an educational institution: Renting of bulding fo an ecucational institution is taxable as renal services are nat cavered inthe exemption entry. Providing free education to certain class of people: Few educational institutions undertake to provide free education to certain class of people to uplift he economically Backward classes in such @ case those service wll not be considered as supply as itis provided without any consider tion (unless otherwise in schedule) Eligibility of input tax credit to an Educational institution: 1) Education institution isnot eligible to aval input tax credit (htips:itaxquruivgoods-and-service-taxlinputtox-cedi-claimed-tc-locked- ‘tansactons-reg him) on inpus/input services which are exclusively used for effecting exempt supplies. 2) However, such instutions are eligible fo aval input tax creit on inpuvinput services which are used for effecting taxable supplies 3) On inputsinputs services which are used for effecting both taxable and exempt supplies input tax credit eligible to be availed shall be ealelated as per rule 42143 which sto be caleulated as follows Let © = Common cre thas input tax credit on inpuinput services which fs used for effecting both taxable and exempt supplies hitps:taxquraivgoade-and-service-tax/get-educationalnettuionshiml snr 3715123, 243 PM {GST On Edvational Insitutions ‘Amount of inelgible credit = C*E/F ‘Where E = Aggregate value of exempt supplies during the tax period (Period for which retum is fled) F = Aggregate value of Taxable suppies during the lax period Elgile amount of crt = C~ amount a eligible creat Since majority ofthe supplies made by an educational insition are exempt, it is suggested to have of expenses which are used exclusively for effecting exempt supplies and taxable supple and on admin related exempted input tax credit can be avalled based onthe above formulae Th: gods and services ox hptaxguintglgoods are senicesax, GST (ps Ranging) Kay Rte lo Prey Poly (hip axgusinfrvscy gale) & Complete Toms of Use an Disliner (tps staxguinfnancldelsnesornwnesagun inhi. 399 sna sweet Author Bio (tts Raxguniauodgestanaiewayootba!) ‘Name: Getana Reddy hips Rexgu hveutnorigstanjaedaybobba) Qualification: CAin Job usiness ‘Company: NIA Location: Hyderabad Talngang, a Member Since: 12 Ju 2021 | Total Pests: 2 (ips shaxguu vaurerlgetaalredayboboa) View Full Profle (htps:itaxgur.niuthorgeetanaiedéybebbal) My Published Posts [GST on Project Works Gorractor (ips taxqusnigood-an-seren tans pojecnoks-corraclr Join Taxgura’s Network for Latest updates on Income Tax, GST, Company Law, Corporate Laws and other related subjects, Jin ws on Whtsapp Joiner on Tegra Review ot on Google M GROUP LINK GROUP LINK G le lore: (hp thatipp con Doge Fie 7R4Or es honchaBG2G9RO_ M22) Oog! Under (tnositwmmgocglacomisearh? Goods setanguapubieatonspBeingF GO¥NSEUSFS- EPwtk2casvea=DanuKewibaracb2anxeigG BOS boca ¥jebCnegCcAFAAlAdmOGIACAFAgEDMCAOMAEADAED \whd=048b0707200086809 Ox12508438000705,.,) Services Tax (https:/taxguru.in/category/goods-and-service-tax/) Peston ahatanging Cnststona vatity of Se 162). of COST Act htps/tagurinigcods-and-sorice-axpetton-

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