Education is the basic foundation of cultural and economic development of a nation. It is the essence of human development in any society. The progress and development of any country speak volumes about the quality and efficiency of its education system.
With each passing year, inflation takes its toll on the economy. It is a vicious business cycle. The supply and demand quotient is in a constant churn. Citizens bear the brunt of taxation, and their hard-earned money takes a big hit.
It is important to note that education, like any other service sector, is an economic activity by itself. Therefore, educational institutions are not completely exempt from gst tax.
The Impact Of GST On The Education Sector
At the initial outset when GST was to come into effect from 1st July 2017, it was assumed that it would not impact the education sector. In fact, some services provided by educational schools are exempt while some items of daily use by the students viz., notebooks, school bags, colouring books will continue to become cheaper.
However, there are many ways that GST will escalate the cost of education. The increase in prices is due to the fact that schools and colleges are dependent on third-party service providers to ensure continual services to students. These services include security, transportation, catering, housekeeping, and a whole lot of other services which attract a GST rate at 18%.
Applicable GST On Educational Services
- Education Services: 18%
- Technical aids for education: 5%
- Instruments, apparatus, and models (for demo purpose): 28%
Partial List Of Educational Services Exempted From GST
- Admission fees
- Education imparted at charitable institutions
- Mid-day meal schemes sponsored by Central and State governments
- Supply of online study material, e.g., journals and periodicals provided under distance study, up to higher secondary level
Education is no longer affordable – be it schooling or college education. It’s hard to maintain savings because most parents will need to shell out the extra bit. The government must need to bring in bold reforms in the education sector, rather than to make superficial cuts in education services.
Proposed Solutions To Invent Affordable Education
Currently, what we see, is an inequality in the levels of education, i.e., the rich can pay a high price to send their children to schools with better infrastructure. In contrast, it’s a struggle for the rest of the population to afford education.
If the economy has to prosper, the government ought to come up with a plan to spruce up national talent development. The government could collaborate with intellectuals and corporates in taking this initiative forward.
Harmony Amongst The Stakeholders
The government has the potential to subsidise educational services and bring all private and government schools under one umbrella, in the same manner as GST. There has to be a joint agreement amongst schools, colleges, real estate owners, banks, corporates, and academia to incentivise and make education free or affordable.
- School education could be made free up to a certain grade so that parents could save money.
- For higher education, banks could offer financial assistance at cheaper rates of interest.
- For education to be accessible, fees must not increase beyond a threshold limit and must comply with a fee regulation mechanism.
Improve Access To Educational Resources
The convergence of technology with students and teachers is a gamechanger in the field of education. Several apps are available at a subscription price and download on smartphones, laptops, and desktops that make learning easy and convenient.
However, despite all the changes happening in the economy, several parents discover these to be additional costs in addition to the existing school fee curriculum. Gadgets are extra investments, and affording them is out of reach for most households.
Extra Help For Children With Disabilities
Education should be without exclusions, and due consideration must be given to accommodate children with special needs under the scope of educational reforms. Pricing and taxation for products and services must work towards an all-inclusive goal.
The provisions of the gst amendment do not appear to be all-encompassing as far as educational services are concerned. But the government can create an inclusive environment and provide quality education for all with its surplus resources.
The scope of GST needs to be very broad, and many provisions must be introduced with a change of business dynamics in the economy.