July 14, 2017

RWAs with over Rs 20L turnover to pay 18%

Services extended by educational institutions to students and staff are fully exempt from GST, the government said on Thursday.

“There are some reports that GST@18% will be levied on annual subscription/fees charged for lodging in hostels. This is not true,” the finance ministry stated.

No hike in tax liability has come into effect in education and related services in the GST era. The tax rate on certain items has, in fact, come down, the ministry said.

An educational institution is defined as any institution imparting education from pre-school to higher secondary school level, and providing education as part of any curriculum leading to a qualification recognised by law.
Thus, fees collected for boarding and lodging for hostels will not attract GST, the ministry said.

New regulations

Resident welfare associations, however, have to pay GST if they collect more than Rs 5,000 a month from a member, and the annual turnover is more than Rs 20 lakh.

Under GST, the tax burden on RWAs will be lower as they are now entitled to input tax credit in respect of taxes paid on capital goods (such as generators, water pumps and lawn furniture), goods (taps, pipes, sanitary and hardware fittings) and services such as repair and maintenance.

Input tax credit on excise and VAT paid on goods and capital goods was not allowed in the pre-GST era, the ministry said.

[The Deccan Herald]