The much talked about Goods and Services Tax or GST will be enforced from July 1, 2017. It is very early to say whether it is going to be good or bad for the education sector. As of now, the government has exempted educational institutions from GST for this year by including them in the ‘Negative’ list - preschools and higher education institutions, to be specific.
Yet, at the same time, according to Entry 9, services provided to educational institutions or by them, in terms of catering, transportation of students, faculty and staff, security, housekeeping etc will be charged between 14-18% tax. In turn, this may result in educational organizations increasing their fees to cover the additional charges.
While some may understand and accept this positively, it becomes difficult, especially for private institutions, as there are certain fee ceilings. It becomes difficult to function with rising prices along with fee restrictions as well.
There is only so much we can do with upgrading infrastructure and other facilities whilst keeping in tandem with fee levels kept by State Governments.
We will have to wait and see how GST will impact the Education Sector holistically. It is too early to arrive on a black and white judgment. The first year post GST implementation will be like the “litmus test” year, to see what works and what doesn’t; and how one should plan for their respective educational institutions around the GST.
Mr. Adhia, our Revenue Secretary, has said the approach for the GST rollout would be to avoid any shock in the first year and any review for inclusion of a service or change in rate could be done in the second or third year of the implementation based on revenue realization.
Keeping that in mind, no one is to know what the 2018 will bring for us with regards to GST. Being in the Education Sector, it is imperative for us to plan our financial structures for each academic year. From what I see, the fee structures will have quite an impact. The only way to tackle this will require support from the Government in terms of the fees’ restrictions, so that we can provide better quality education, infrastructure and other facilities for our students.
To sum it up – Apart from higher fee structures, paying GST for services rendered to the Educational Institutions like transportation, catering etc might cause an initial financial chaos, due to increased costs. Too early to comment on whether it’ll be a positive or negative impact, we’ll have to wait and see how it unfolds, hopefully with the Government’s support.