Maharashtra authority for advance ruling (AAR) has provided relief to many schools across India, by saying in a ruling that canteen and transportation services provided by schools are outside the ambit of Goods and Services Tax (GST).
“Nil rate of tax on the supply of pre-school education services to its students against a fee, supply of goods, canteen service, supply of transportation service to pre-school students and faculty/staff without any consideration as well as with some consideration,” the ruling said these services can be considered “composite supplies” if the school is already charging the money along with the school fees.
However, the issue of whether an item or service, such as money for the school bus that is supplied with, say, school fees, is taxed is determined on the basis of how the service is provided.
The question under review was whether these services provided by schools and the money charged by them should be subject to GST. As many schools and other educational institutions were facing the issue of GST on these services. While, as per the GST framework, there is no tax on school fees.
“This ruling has rightly interpreted the concept of composite supply and clarified that as pre-school education is exempt under GST, any other goods supplied along with it without any consideration would qualify as composite supplies and a nil rate of tax would be applicable,” said Harpreet Singh, partner, KPMG India.