Worried About Education Expenses? GST Will Make You Worry More

The 18% tax on third-party services in higher education institutions would make your college-going more expensive.

Ambiguities regarding how the Goods and Services Tax (GST) would impact various sectors lingered on as it was officially launched by Prime Minister Narendra Modi and President Pranab Mukherjee at the Central Hall of Parliament at midnight on Friday.

Now, if you're currently studying in a college and already worried about your expenses, then let us tell you that the implementation of the unified tax regime may make matters worse.

As pointed out by a report in The Economic Times, while a relatively lower tax on education-related goods like notebooks and school may give the perception that GST is education-friendly, the tax on third-party services in higher education institutions would end making your college-going a more expensive affair.

These services, including catering, housekeeping, security and transportation - which are sourced from outside - are now taxable at 18 percent.

The tax on them would basically translate to higher fees, with things like hostel food and laundry turning out to be more expensive.

However, one should note that institutions below higher education have been granted exemption with regard to the tax on such services.

Also Read: Roti, Kapda, Makaan: How GST Will Affect Your Monthly Budget

In addition to this, an increase in tax for non-traditional courses from 15 percent to 18 percent would also make student life more difficult, as the report calculates a tax increase of Rs 40,000 - from Rs 1.4 lakh to Rs 1.8 lakh - for a course where you are paying Rs 10 lakh.

There would also be a negative impact on the coaching industry, with tax going up from 15 percent to 18 percent.

Regarding the possible adverse impact on the sector, a TOI report quoted Vidya Yeravdekar, principal director, Symbiosis Society, as saying:

It is good that the government has exempted education and healthcare sectors from the GST. However, the services provided by educational institutes is still going to be taxed. Eventually, the cost of education per student is bound to increase in the given situation.

Vidya Yeravdekar, principal director, Symbiosis Society to TOI

Also Read: It’s Our Collective Effort: PM Modi at the Midnight Launch of GST