Coaching Federation Urges GST Rationalization in Upcoming Union Budget
The Coaching Federation of India (CFI) has formally appealed to Union Finance Minister Nirmala Sitharaman to rationalize the Goods and Services Tax (GST) structure applied to coaching and supplementary education services in the forthcoming Union Budget. The New Delhi-based federation, which claims to represent numerous coaching centers nationwide, submitted its representation on January 28, highlighting that the current tax regime is inflating costs for parents and placing undue pressure on small educational businesses.
Current GST Structure Called Burdensome and Distortionary
In its detailed letter, the CFI has specifically requested a reduction in the GST rate on coaching services to 5 per cent or a complete exemption from the tax. The federation argues that unlike manufacturing or trading enterprises, coaching institutes have limited opportunities to offset their tax liability through input tax credit mechanisms. "As a result, the Goods and Services Tax (GST) becomes a direct add-on to student fees, effectively shifting the burden to parents," the federation stated in its communication to the finance minister.
Keshav Agrawal, Vice President of CFI, emphasized that coaching should no longer be viewed as a discretionary service. "With competitive exams such as JEE, NEET, CUET, CA, CLAT, SSC and UPSC becoming central to academic and career pathways, coaching has become a necessity for many middle-class families," he remarked, underscoring the essential role these services play in contemporary education.
Proposed Changes to Exemption Threshold and Sector Impact
The federation also pointed to the existing Rs 20 lakh GST exemption threshold, labeling it as outdated given the current economic climate characterized by rising operational costs, including rents and salaries. To address this, the CFI has proposed:
- Raising the exemption limit to Rs 1 crore specifically for coaching and supplementary education services.
- Arguing that the current cap forces even small centers with narrow profit margins into the tax net, while larger coaching chains benefit from economies of scale and greater compliance capacity.
According to the federation's assessment, the present tax framework is distorting the sector by inadvertently promoting informality. This manifests in some smaller centers choosing to remain unregistered, and parents actively seeking out "no-GST" options to reduce expenses, thereby undermining formal business practices and tax compliance.
Alignment with National Education Goals and Call for Consultation
The CFI contends that implementing a more balanced and rationalized tax structure would yield multiple benefits:
- Enhance voluntary compliance within the coaching industry.
- Make quality supplementary education more affordable and accessible to a broader segment of students.
- Better align fiscal policy with the objectives outlined in the National Education Policy-2020.
In addition to its specific proposals, the federation has requested a stakeholder consultation with the finance ministry. This meeting would allow the CFI to present ground-level data and detailed insights before the Union Budget is officially presented on February 1. The body believes such engagement is crucial for formulating tax policies that support the education sector's growth while easing the financial strain on families and small businesses.
