It goes with the thinking that Goods and service tax (GST) which has started did not hit the students much. But that is not true.
Yes, services provided by many educational institutions will be exempted. Some items of daily use by students such as school bags, notebooks and craftbooks will become cheaper. Indian government foremost priority is to provide low cost education to one and all. That’s why education sector enjoy lots of tax exemption as they are not taxed.
But there are many ways on which the impact of GST will definitely fall as a pressure on the students.
GST is an indirect tax–a tax on consumption of goods and services. An inherent feature of indirect tax is that the burden of the tax, rather than being borne by the industry (i.e., the manufacturers or traders or service providers), is passed to the consumers.
There are ways in which GST has rose the cost of education.
Though Pre-primary and higher secondary educational services to remain tax-free still it is expected that GST is making higher education costlier in private institutions. Higher education institutions will have to pay GST when availing of a wide range of services.
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. As a result higher fees will come up as these will now attract 18% GST levy. Hostel 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.
Though services such as transportation of students, catering and security provided to institutions from pre-school to higher secondary have been exempted from the service tax, the institutions of higher education will have to pay tax on these services.
An official of the SP Jain School of Global Management said, “Additional 3% payout may impact wallets of students and their parents. This will further which effect the education sector and the business.”