No, GST won’t spare students: Education cost will go up

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Many think the Goods and Services Tax (GST) , which will come in force from July 1, won’t hit students hard. But that’s not true. Yes, services provided by many educational institutions will be exempted. Some items of daily use by students such as school bags, colouring books and notebooks will become cheaper.

But there are several ways the GST will raise the cost of education. Most students will have to shell out more for studies. Here’s how:

The biggest factor will be the tax on services offered to  educational institutions. Most educational institutions buy services like security, transportation, catering and housekeeping from third-party service providers. These will now attract 18% GST levy, which will reflect in higher fees. 

Though services such as transportation of students, catering and security provided to institutions from pre-school to higher secondary or equivalent have been exempted from the service tax, the institutions of higher education will have to pay tax on these services. 

Students will also have to pay more for laundry, food in hostel mess, medicine, stationary and other services and products they buy on the campus. All such services will now attract a levy of 18 percent.

Tax on such services was withdrawn in 2012 till April 2017 after which these used to attract a charge of 3 per cent.

To put it in figures, if a student pays Rs 1 lakh in a year for a course in a top college, he pays Rs 3,000 as tax. After July 1, he will have to pay Rs 15,000 more in tax.

Think of a higher education institution with a sprawling campus of several acres. The institution in all likelihood must have rented out the maintenance and security services to third parties for lakhs of rupees. Now add 18 per cent extra to that amount, which the institution will surely pass on to students by way of higher fees.

The GST Council has kept traditional courses out of the tax net. But it has increased tax on non-conventional courses, certificate courses and training programmes from 14% to 18%. Tests and exams for admission to overseas colleges will also be subject to GST. 

So, if the fee of a professional course is Rs 10 lakh, you will now have to pay Rs 1.8 lakh more instead of Rs 1.4 lakh you paid earlier.

Another major impact on students will be due to taxing of coaching fees. Till now, students enrolling in coaching institutions to get into professional courses such as engineering paid 15% tax. The new GST levy will be 18%. A student paying Rs 1 lakh to a coaching centre will have to pay Rs 1.18 lakh after GST, which is Rs 3,000 more. 

Read more at: http://economictimes.indiatimes.com/industry/services/education/no-gst-wont-spare-students-education-cost-will-go-up/articleshow/59287172.cms

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