Jul 262017
 

Whether educational institutions are also liable to get registered under GST?

Are education institute are liable to be pay GST:

Rate of GST on services as prescribed by government under Sr. No. 69 is given below: of Services Rate

Sr. No. 69

Services provided -

a)    by an educational institution to its students, faculty and staff;
b)    to an educational institution, by way of,-
i.    transportation of students, faculty and staff;
ii.    catering, including any mid-day meals scheme sponsored by the Central Government, State Government or Union territory;
iii.    security or cleaning or house-keeping services performed in such educational institution;
iv.    services relating to admission to, or conduct of examination by, such institution; upto higher secondary:

Provided that nothing contained in entry (b) shall apply to an educational institution other than an institution providing services by way of pre-school education and education up to higher secondary school or equivalent.

Nil

Thus, as per above entry educational institution are not required to pay GST on their services provided to students.

Are educational institutions are required to obtained registration under GST?

As per section 22(1) of the act – Every supplier shall be liable to be registered under this Act in the State or Union territory, other than special category States, from where he makes a taxable supply of goods or services or both, if his aggregate turnover in a financial year exceeds twenty lakh rupees.

For ascertaining the liability to obtained registration two major conditions needs to be fulfilled:

(i)    For ascertaining place of registration – from where taxable supplies are being made.
(ii)    When liable to obtained registration – when aggregate turnover in a financial year exceeds Rs 20,00,000/-.

Section 23(1)(1) states that –  The following persons shall not be liable to registration, namely:-

Any person engaged exclusively in the business of supplying goods or services or both that are not liable to tax or wholly exempt from tax under this Act or under the Integrated Goods and Services Tax Act;

Taxable supplies:

Section 2(108) Taxable Supply  means a supply of goods or services or both which is leviable to tax under this act;

 As per section 9 services provided by educational institutions are leviable to tax and hence GST shall be levied on services are provided by educational institute at the rate notified by government which is NIL as mentioned above.

Aggregate turnover:

Section 2(6) AGGREGATE TURNOVER  means the aggregate value of:(i)            Taxable supplies (excluding the value of inward supplies on which tax is payable by a person on reverse charge basis),(ii)           Exempt supplies,

(iii)          Exports of goods or services or both and

(iv)          Inter-State supplies of persons having the same Permanent Account Number,

To be computed on all India basis but excludes central tax, State tax, Union territory tax, integrated tax and cess;

Section 2(47) Exempt Supply means supply of any goods or services or both which attracts nil rate of tax or which may be wholly exempt from tax under section 11, or under section 6 of the Integrated Goods and Services Tax Act, and includes non-taxable supply;
Section 2(78) Non-taxable supply” means a supply of goods or services or both which is not leviable to tax under this Act or under the Integrated Goods and Services Tax Act;

Since, services provided by educational institutions are exempted supply which are to be included in the included turnover for ascertaining the liability to obtained registration.

Conclusion:

In view of the above discussion the position of educational institutions may be summarized as below:

  1. In case educational institution is providing only educations services than such fees are chargeable at NIL rate and such educational institutions are not liable to get themselves registered.
  2. In case educational institutions are also providing other supplies, i.e., providing books to students, providing shoes and dress etc to students then in such cases such institutions are liable to get themselves registered.

Effect of registration:

  • Fee receipts shall be issued to students in the format prescribed under GST.
  • All expenses incurred by educational institutions needs to be scrutinized to see whether any liability to pay GST exist under section 9(4) as reverse charge mechanism taxpayer.
  • Monthly returns shall be filled all such educational institutions.
  • Input tax credit may be claimed for eligible expenses
  • Refund may be claimed for unutilized input tax credit.