School canteen, bus services not under GST purview: AAR

Canteen and transportation services provided by schools are outside the purview of Goods and Services Tax (GST), the Maharashtra authority for advance ruling (AAR) has said in a ruling that will offer relief to many schools across India.

The question under review was whether these services provided by schools and the money charged by them should be subject to GST.

As per the GST framework, there is no tax on school fees.


"Nil rate of tax on the supply of pre-school education services to its students against a fee, supply of goods, supply of transportation service to pre-school students and faculty/staff without any consideration as well as with some consideration, as well as on the supply of canteen service to its faculty and staff for some consideration," the May 25 ruling said.

The ruling said these services can be considered "composite supplies" if the school is already charging the money along with the school fees.

Earlier rulings have asked companies to cough up GST on canteen services to employees.

Tax experts say many schools and other educational institutions are facing the issue of GST on these services.

"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.

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.

Especially, when there is no GST on the school fees.

Under the GST framework, the supply of such items can be defined as a composite supply or a mixed supply.