GST on Education Programs

Much needed clarification in the matter of applicability of GST on education programs with respect to the various programmes being conducted by the IIMs (i.e. The Indian Institutes of Management) was being provided by the Government of India vide circular no. 82/01/2019-GST dated 1^st January 2019. Vide the said circular, the entire position of GST applicability on IIMs has been explained and the same is taken up in the present article.

Basic GST Exemption for Education

Since educational institution are engaged in providing the basic necessity of the nation i.e. education, services provided by them are exempted under the GST. Sr. no. 66 of notification no. 12/2017-Central Tax (Rate) dated 28.06.2017 provides NIL GST rates for services that are being provided by the ‘educational institution to its students, faculty and staff; As per the above provisions, it is pretty clear that all the services provided by the education institution to its students, faculty and staff are exempt from GST. Now, it is very important to understand the term ‘educational institution’ in order to fix the exemption criteria. Under the same notification i.e. 12/2017- Central Tax (Rate) dated 28^th June 2017, the term ‘educational institution’ has been defined under 2 (y) of the definition section. The important feature of the definition of ‘educational institution’ is provided hereunder – ‘Education institution’ means the institution providing services of –

Pre-school education and education upto higher secondary school or equivalent,
For imparting education as a part of the curriculum for obtaining the qualification recognized by any law for the time being in force,
Education as a part of approved vocational education courses.

Thus in order to get an exemption as available at sr. no. 66 of notification no. 12/2017-Central Tax (Rate), it is important for the institution to get covered within the scope of the definition ‘educational institution’. GST on Educational Services

Education Programmes Being Conducted by the IIMs

Prior to enactment of the Indian Institutes of Management Act, 2017, the IIMs were not covered within the definition of the educational institution and hence the exemption available at sr. no. 66 of notification no. 12/2017- Central Tax (Rate) dated 28^th June 2017, as described above, was not available to the IIMs. However, sr. no. 67, of the said notification, prescribes NIL GST rates for the following specific educational programmes provided by the IIMs to their students –

Two-year full-time Post Graduate Programmes in Management for the Post Graduate Diploma in Management. Admission for the said programmes is being done on the basis of CAT i.e. Common Admission Test.
Fellow programme in Management.
5 years integrated programme in Management.

Thus for the period 1^st July 2017 till 30^th January 2018, GST exemption to IIMs would be available only to the above 3 referred programmes. Other than the above 3 referred programmes, all the services provided by the IIMs were taxable.

Period 31^st January 2018 to 31^st December 2018

The Indian Institutes of Management Act, 2017 came into force from 31^st January 2018. As per the enacted Act, all the IIMs (list of the same is provided in the schedule to the IIMs Act) are ‘institutions of national importance’. Further, the Act empowers to grant degrees, diplomas and other academic distinctions or titles, Act also empowers to specify the criteria and process for the admission to the courses/programmes of study and the further the Act also empowers to specify the academic content of the programmes. Concluding thereby that the IIMs after enactment of the Act, provides education as part of a curriculum for obtaining a qualification recognized by the law and hence the same is covered within the scope of the term ‘educational institution’. Thereby enabling the IIMs to qualify for exemption from GST available at sr. no. 66 of the notification no. 12/2017-Central Tax (Rate) dated 28^th June 2017. In spite of qualifying as ‘educational institution’ and getting the benefit of exemption available at sr. no. 66, the exemption at sr. no. 67, as specified above, still continued. However, vide notification no. 28/2018- Central Tax (Rate) dated 31^st December 2018, sr. no. 67 of notification no. 12/2017 has been omitted. The said notification no. 28/2018 is effective from 1^st January 2019. Concluding thereby that for the period 31^st January 2018 to 31^st December 2018, both the exemption available at sr. no. 66 and sr. no. 67 to notification no. 12/2017 – Central Tax (Rate) is available to the IIMs and as per prevailing legal position, in case two or more exemption is available, one can claim the exemption which is more beneficial.

Period 1^st January 2019 and Onwards

As seen above, since the exemption available at sr. no. 67 has been omitted, from 1^st January 2019, IIMs are henceforth eligible for an exemption available only at sr. no. 66 and any other services which do not fall within the exemption criteria of sr. no. 66, the same is taxable and appropriate GST is payable on the same.

Conclusion

The below-mentioned table provides the gist of the matter:

PERIOD	AVAILABLE EXEMPTION	REASON
1^ST JULY, 2017 TO 30^TH JANUARY, 2018	Sr. No. 67 of notification no. 12/2017 – Central Tax (Rate)	Since IIMs were not covered within the scope of ‘educational institution’.
31^ST JANUARY, 2018 TO 31^ST DECEMBER, 2018	Sr. No. 66 and Sr. No. 67 of notification no. 12/2017 – Central Tax (Rate)	IIM Act enacted from 31^st January 2018
1^ST JANUARY, 2019 ONWARDS	Sr. No. 66 of notification no. 12/2017 – Central Tax (Rate)	Sr. No. 67 omitted vide notification no. 28/2018 – Central Tax (Rate)