18% GST likely to have major impact on coaching classes and private institutes

GST, which has completed one year this month on July 1, 2018, has continued to haunt the students from the weaker section of society and professionals in India.

As per the ruling given by the Maharashtra Authority for Advance Rulings (AAR), 18 per cent GST has been levied for coaching classes and institutes offering value-added courses that help students prepare for engineering and medical entrance exams and private institutes that provide professional courses that help students grow and improve their career.

On one hand, the Government has completely exempted GST for the colleges and institutions that are approved by AICTE (All India Council for Technical Education) or UGC (University Grants Commission), while on the other hand, coaching classes and private institutes that offer professional certification courses and training programs have been placed in the slab rate of 18 per cent.

Due to the higher taxation rates in the new regime, the coaching institutes across India have enhanced the fees for the preparation of medical and engineering examinations. This move by the government will not only impact the students preparing for competitive examination but will also have an impact on working professionals who opt for professional courses to enhance/develop certain skill sets.

Dr. Vijay Khole, Former VC - Mumbai University said, "Education, is a necessity and not a luxury, should not be taxed at 18 per cent. To make our respected Prime Minister's dream of "Make in India" come true, we need to first educate India. To make this possible, both certificate programs for skill development (which would ensure better employability) and coaching institutes (which would help students score good marks in examinations) is very important."

Khole added, "In order to compete with the world, we need the young generation to be well equipped with professional courses covering topics like Business Analytics, Data Science, Digital Marketing, Machine Learning, Big Data, Robotics, and Artificial Intelligence. There are tremendous career and growth opportunities for the students, but with higher taxation, the students will now have to pay more for good-quality education and students from economically weaker sections of society will feel the pinch."

"Professionals who are already paying income tax and professional taxes will now have to shell out more the form of GST for taking up skill development courses," he further added.

Akash Dixit, a student undergoing coaching for cracking entrance exams, said, "It is very difficult to crack competitive exams and entrance exams without professional coaching. My father enrolled me at a leading coaching institute of the city, but post-GST the rate of tax on coaching institutes has been hiked to 18 per cent. This will be a burden for my parents."

Dr. SS Mantha, Former Chairman - AICTE, said, "Imposition of this tax is a virtual denial of education to students coming from socially and economically weaker sections. Education is the basic requirement that allows an individual to improve his standard of living. It is a bare necessity and not a luxury, hence either it should be completely exempted from GST or should be at a minimum slab of 5 per cent."

Parents, students, as well as working professionals are worried about the higher tax rates on certificate programs and coaching fees declared by the GST Council. They have urged the GST Council and Prime Minister to review the 18 per cent GST rates on coaching fees and ensure that either it is exempted or considered under the minimum tax slab of 5 per cent GST.