Higher Education Now a Distant Dream due to GST Impact?

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From a rate of 14% Gross Enrollment Ratio (GER measures the proportion of students who opt for Higher Education after passing Higher Secondary Certificate or equivalent examinations) in 2009-10, India has come a long way to achieve nearly 24% GER as of 2015-16. But there is still some distance to go as far as achieving developed countries’ standards go, which hover close to 60%.

And while the jury is still out on whether this rise in GER is due to the nouveau political will or the Education Sector consolidating its efforts, what is surprising is the sudden and arbitrary hike in tax in one of the crucial non-core services that forms an integral part of the Indian Education Sector – all thanks to GST, which was rolled out in July 2017.

Under the new GST regime, Higher Education Service Providers will be taxed 18% for services like student enrollment, campus security, catering, and so on, which were untaxed until GST came into effect.Ideally, service providers operating in this crucial space should not fall under the ambit of GST, because if they are under GST, they will pass on the burden to the Universities/colleges and they in turn will pass on the financial load to the students. Because of this, students will have to pay more for higher education. All of this has the potential to badly dent any further improvement in India’s Gross Enrollment Ratio.

On the one hand, we have the Prime Minister promising to skill and hone indigenous talent through schemes such as Skill India, and on the other we have this counterintuitive measure that indirectly places a bigger financial load on students aspiring for Higher Education in reputed private institutions, thus making their dreams even more distant. Somebody needs to remind the government that schemes such as Make in India and Skill India need an appreciating GER, and not a depreciating one!

Here are some simple corrective steps that can be taken:

  • Gradually Escalating Taxation – GST of 5% over the next 3 years and 12% thereon seems apt, as India will by then undoubtedly have gone a father distance as far as achieving its GER goals go (35% by 2020).
  • Subsuming of Auxiliary Education Services – Political will to subsume Auxiliary Educational Services into the Indian Education Sector will go a long way in the consolidation of a more robust and cost-effective Sector.

Dear Indian, your one click could go a long way in helping me roll back this unfair tax. As I've always said, GST should not be levied at age 18 -- #GST_NotAt18.

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Thank You,
A Concerned Indian



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