Hyderabad: Students of coaching institutes will continue to pay 18% goods and services tax (GST) on fees, accommodation and mess charges and will not be eligible for any kind of exemption, according to a new ruling by the Andhra Pradesh bench of the Authority for Advance Ruling (AAR).
Announcing its verdict on an application filed by Guntur-based coaching institute named Master Minds, which provides coaching to students for preparing for Chartered Accountancy (CA) and Cost and Works Accountancy Certificate (ICWA) examinations, the AAR said the services of supply of education by such institutes are not eligible for exemption from payment of GST.
Under the current tax regime, the government has dully exempted core education services from GST. These include pre-school education and education up to higher secondary school; education as a part of a curriculum for obtaining a qualification recognized by any law; and education as a part of an approved vocational education course.
Other educational services continue to attract 18% levy. Beyond education services, some of the input services like canteen, repairs and maintenance are also taxed under GST.
Explaining its decision on the Master Minds application, AAR in its ruling said that the coaching or training in such coaching centres is not a mandatory compliance for an aspirant in pursuing their study and obtaining certificates from ICAI and ICWAI.
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“The coaching or training imparted by such institutes is only a facilitation/improvisation of the preparation for the said exams and cannot be considered as a coaching/training leading to grant of certificate, qualification etc. recognized by law,” the ruling said.
AAR also highlighted that institutes like Master Minds are not offering a uniform curriculum and instead offering variety of coaching and training courses (regular, crash courses, revision exam courses etc.,) with different structures of fee and options to the aspirants of CA and ICWA.
Therefore, the services provided by the applicant (Master Minds) do not fall under the definition given to ‘Educational Institution’, the AAR said.
The AAR ruling is in line with previous orders that prohibit private coaching institutes in the country from availing GST exemption. Earlier in 2018, the Maharashtra bench of AAR had ruled that coaching centres providing tuition to prepare students for entrance examination are liable to pay 18% GST.
Last year, representatives of major coaching institutes had demanded to either remove the 18% GST on coaching centres or reduce it to the lowest tax slab in order to provide some financial respite to lakhs of students and their parents who pay lakhs of rupees as coaching centre fees.
As per an estimate, more than 50 lakh students and job seekers write exams like GATE, NEET, JEE, civil services examinations, etc and almost half of them join coaching institutes for preparation.
(ETV Bharat Report)
