Impact of GST on Higher Education

Education and healthcare is technically exempted from GST. The ripple effect is yet to be felt.


If you are an education provider relishing the exemption of your services from GST, you might want to rethink. 

“Services provided as input to higher educational institutions are already taxable. In some of such 'input' services utilised by higher educational institutions (say, housekeeping, transportation, examination conduct etc.), service tax is usually levied and this practice will continue even after GST has become operational. The GST exemption in education is included for providing education (which is tax free as a service) and on procurement services utilised by primary schools,” explains Prof. Deepanshu Mohan, Executive Director Centre for New Economics Study,‎ Jindal Institute of International Affairs (JSIA), OP Jindal Global University

“Initially, a service tax of 15.5% was levied on the courses offered to students, which has now been raised to 18%. In effect, this is a direct 2.5% increase in the fee. There might be a difference in the way we used to pay our mentors before GST was brought about since most of them are freelancers. Acadgild has students both from India and abroad in the same batch. In such cases, the payment structure is still not very clear. The introduction of GST has brought about a lot of ambiguity and we are still in the process of understanding GST and its implications,” says Vikalp Jain, President and Co-Founder, Acadgild

He further added, “Given all the emphasis on skilling people, there was an expectation that skill-based courses will have a much lower GST on them. However, the 18% GST levied on them will impact imparting higher education in a major way, more so the courses aimed at skilling and reskilling.”

Although technically education and healthcare is kept aside from the effect of GST, it is not yet time for students and parents to think that the fees might come down or there wouldn’t be any ripple effect of GST.

LPU Chancellor Mr Ashok Mittal said, “So far the education sector has been totally exempted from any kind of service tax. Even under the new GST regime education is exempted from taxation. So there will be no rise in the college/university fees. This is gratifying, especially for the middle class parents whowant to send their ward for higher education.

But the concern is that since GST is going to apply to many of the services that students invariably need to avail -- infrastructure facilities, food and canteen, books and stationery, IT products and services, transport facilities etc. – students and their parents will have to shell out more now. So even though education continues to be exempted, they will be indirectly affected by GST. Having said that, I would like to add that implementation of GST is a welcome step in integrating the country under a single tax regime should have a unifying effect and positive impact. Let’s hope it is a smooth run for GST.”

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