GST ISSUES ON COACHING INSTITUTIONS
By: – Dr. Sanjiv Agarwal
Goods and Services Tax – GST
Dated:- 5-2-2016
While 'education' continues to be of utmost importance for the country's economic growth, it also has been a priority for the government in extending tax benefits and other concessions to boost education (both primary and professional / technical) in the country.
The much thoughtful leaders of India have spared the education sector all alone from levy of taxes considering the importance of the same for the country. If a country wants to grow manifold than building infrastructure for education and educated infrastructure (people of the country) is a prerequisite.
Education / coaching / training is a primary activity imparting skill in a particular discipline and is a process of development of personality of body, mind and intellect. The scope of education is broad but training or coaching is in a particular field. All three are very important today wi
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ract Service Tax @ 14 per cent.
Not only this, coaching is placed in such a situation where its inflow and outflow both are under the negative list or exempt and it is only the coaching part of entire education which is subject to levy of Service Tax.
It may be necessary at this point. To bring in the relevance of coaching in our education system. Why do we need coaching today ? What is the purpose it serves ? What if coaching is not available ? In fact coaching bridges the gap of quality between the input (student coming for coaching) and the output (quality /skills required for further technical or professional courses). No coaching would be required if the education system of the country takes care of the desired levels of quality of education at all stages of education/career of a student. Since it is not there, the gap is filled by the coaching institutes.
The importance of education has been considered in Service Tax law. Under the negative list following education services we
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#39;coaching' has been taxed. The Government need to understand that coaching only supplements the education and is an aid to complete the educations. Coaching and education both go together and in the present system, one cannot think of education without coaching. Infact many schools and colleges also provide coaching to the students appreciating the fact that it cannot be done away with.
All parents want to provide the best educational opportunities for their children and coaching has become indispensable and irreplaceable to reinforce learning. More parents are becoming career-oriented and professional and they can't pay adequate attention to their children's education. Also, admittedly, many parents are not well-educated and knowledgeable enough in the academic field where their children need assistance. The benefits afforded by coaching institutions are enormous. Realistically it is already an integral part of a student education.
With the ever increasing emphasis of getting
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y subject or fields other than sports, with or without issuance of a certificate ….
Today coaching is a major feeding industry to the main stream education sector and given this fact, it is more than justified that it be considered at par with education and spared from all types of taxation by way of exemptions, concessions and inclusion in negative list for the purpose of Service Tax.
This argument becomes important at this juncture when India is embarking into an era of largest ever indirect tax reforms in the country with the introduction of Goods and Service Tax (GST) in near future. The other arguments could be many same of which, inter alia are discussed here, besides the main aspect of considering coaching at par with education itself.
* The subject of coaching, i.e., students to whom coaching is imparted come from an exempt environ (pre-school / school education) and post imparting of coaching, again enter the education field which is excluded from the scope of Servi
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ivil structure or a part thereof; or
laying of foundation or making of structures for support of capital goods, except for the provision of one or more of the specified services; or
(B) services provided by way of renting of a motor vehicle, in so far as they relate to a motor vehicle which is not a capital goods ”
* In absence of significant amount of tax credit not being allowed, it adds to the cost of providing coaching (educations) which again is not desirable.
* Coaching section also suffers from high completion leading to increased costs in terms of advertisements, fee concessions and discount etc which are not allowed as credits or are disputed (without any sustainable grounds) leading to tax disputes / litigation. This also ought to be sorted out and settled.
* Today (w.e.f. 1.6.2015), rate of Service Tax is 14% (prior to 1.6.2015, it was 12.36% including education cesses). This itself is considered to be a very high rate of taxation / an indirect tax) which adds to t
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