Negative impact on Education sector
NO INPUT CREDIT AVAILABLE FOR SERVICES TAKEN UNDER GST
The GST Council’s decision to exempt services provided by educational institutions to its students is a step in the right direction. However, services to higher educational institutions are not GST free.
Services in the nature of transportation, catering, housekeeping, admissions or examination conduct if provided to higher educational institutions were subject to service tax and now will also be taxed under GST. The GST exemption on procurements is available only to schools (from pre-school up to higher secondary school or its equivalent). Thus, the ‘input’ or supply of services such as transportation, catering, housekeeping, services relating to admission or conduct of examination to higher educational institutions will bear a GST levy. This will have to be borne by the higher educational institution.
As the ‘output’ (service of providing education to students) is tax free, no input credit would be available. This partly defeats the purpose of exempting educational services from GST.
ADDITIONAL BURDEN OF REVERSE CHARGE MECHANISM
The impact of non-eligibility of input tax credit is even more pinching due to the mandatory reverse charge mechanism if the goods or services are procured from unregistered dealers. Educational institutions typically obtain services from freelancers such as supervisors, research assistants, paper setters et all.
Payments to such individuals would attract GST under reverse charge — it is the educational institution which would pay this tax and also comply with formalities of uploading documents on the Goods and Services Tax Network (GSTN) portal. This dilutes the objective of keeping education outside the GST ambit.
INCREASE IN COMPETITION
It is gradually becoming evident that the education from nursery to Higher Secondary Examination will gain from the GST policy as it is excluded from the tax category in the current scenario. Secondly, all Governmental activities/ services/ initiatives for educational purposes will also receive tax relief. However, this also implies:
- Higher education in all universities/ colleges the private sector will become more expensive
- Competition for admissions in Government schools/colleges/institutions will increase.
— Vivek Jain, Founder at CAclubindia, an interactive platform for the finance professionals
- AIIMS 2018 All-India toppers 20 Jun 2018 | PNS
- Survey on Math learning 20 Jun 2018 | PNS
- New course & lab 20 Jun 2018 | PNS
- NIOS conducted workshop 20 Jun 2018 | PNS
- Counselling for NEET 2018 20 Jun 2018 | Rajshekhar Ratrey
- Admission Open 20 Jun 2018 | Pioneer
- Become a yogapreneur 20 Jun 2018 | MONIKA THAKUR
- In brief 20 Jun 2018 | Pioneer
- Fortuner 20 Jun 2018 | Vinayak Bhatt
- Wanted interns 20 Jun 2018 | Pioneer
Sunday EditionView All
17 Jun 2018 | VR Jayaraj | Kochi
In a swift move intended at stemming the protests brewing in the State police force against certain top officials’ ‘feudalistic’ practice of persecuting policemen and camp followers by using them as house servants, the Kerala Government on Saturday removed ADGP Sudesh Kumar, whose daughter was the other day booked for assaulting and verbally abusing his official police driver, from the position of head of the Armed Police Battalion. The action against...
STATE EDITIONSView All
21 Jun 2018 | Staff Reporter | Raipur
NMDC organised Vendor’s Meet for its upcoming Nagarnar Steel Plant in a private hotel in Raipur on Wednesday where around 250 vendors turned up. NMDC’s 3 MTPA capacity steel plant project in Bastar being constructed at a cost of Rs15525 crore is slated to be commissioned by the end of this year...