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Entrance exam coaching centres liable to 18% GST: AAR

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Entrance exam coaching centres are are liable to pay 18 per cent GST, said the Authority for Advance Rulings (AAR).

The Maharashtra Bench of AAR has received an application to seek advance ruling on whether the services related to providing the coaching for entrance examination will come under the ambit of the Goods and Services Tax (GST).

“The private institution does not have any specific curriculum and does not conduct any examination or award any qualification or award any qualification recognised by any law. We find that the education service provided in the case is taxable at the rate of 9 per cent under CGST Act and 9 per cent under SGST Act,” the AAR said.

As per the GST regime, tax applied on any commodity or service is equally shared between the Centre and the states. Hence with 9 percent of CGST and 9 per cent of SGST, the total GST on the services provided by tuition or coaching classes for entrance examination would be liable to 18 per cent GST.

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Under GST, services provided by an educational institution to its students, faculty, staff are exempt from the levy. The GST law defines educational institutions as those imparting pre-school or education up to higher secondary level or those which are part of an approved vocational education course. The definition also includes those which provide education as a part of a curriculum for obtaining a qualification recognised by any law.

“Private coaching classes were earlier taxable at 15 per cent (service tax) and now would be taxable at 18 per cent (GST), but this does not mean an increase in cost for students, such institutions are eligible for much higher input tax credit which should be passed on to students so as to keep the total fee same,” said AMRG & Associates Partner Rajat Mohan.

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