No GST on school students' hostel fees, says Centre, rubbishing reports

The introduction of the Goods and Services Tax regime will not lead to a rise in boarding and lodging costs for parents of under-Class X students staying in hostels.

The Centre on Thursday issued a clarification on the issue after some reports claimed that 18 per cent GST will be levied on the annual fees charged by schools/hostels for lodging.

The government, however, has said that lodging and boarding services in hostels operated by educational institutions from the pre-school to higher secondary level will be exempted from GST.

Rubbishing the reports, the government said that the introduction of the GST regime has, in fact, led to a reduction on the taxes levied on several items of education and all services that are provided to students and staff.

The Finance Ministry also similarly rubbished reports that services provided by Resident Welfare Associations will cost more due to the GST. The Centre said that RWAs that are



registered as non-profit entities will be GST exempt.

However, this comes with a rider: A government communique said, "If the aggregate turnover of such RWA is up to Rs 20 lakh in a financial year, then such supplies would be exempt from GST even if charges per member are over Rs 5,000."

This means that RWAs will be liable to pay GST on monthly maintenance or contributions charged from residents if the per member subscription is more than Rs 5,000 and the annual turnover of RWA by way of supplying of services and goods is Rs 20 lakh or more.

Government officials further said that even in such cases where RWAs are liable to pay GST, they could expect a lesser tax liability as the associations will be able to claim input tax credit for money spent on items such as generators, furniture, pool and recreational facility equipment, and water pumps. Similar deduction can be claimed on input service charges paid to various service providers.