Under GST, education in pre-schools and schools continues to remain tax free but colleges won't be.
The GST or Goods and Services Tax was launched at midnight at a function in Central Hall of Parliament on Friday. The biggest tax reform since Independence will change the indirect tax landscape of the country, subsuming over a dozen separate central and state taxes.
So what does it have in store for students?
Consider the case of 22-year-old graduate Reetika Sethi who hopes to study International Business. For many like her, higher education may soon become more expensive than they bargained for. "From 15 per cent service tax it is going up to 18 per cent which will burden my extracurricular activities, my books and everything else. This is going to be an added burden on my parents," she said.
Under GST, education in pre-schools and schools continues to remain tax free. However, services offered by colleges and universities will now be taxed at 18 per cent compared to the earlier 15 per cent. This tax could make campus food, medicine, transport, and other on-campus products or services more expensive.
That's not all; the impact will also be felt for students who opt for coaching classes and non-conventional courses, which will also attract a 3 per cent hike under the GST.
"Education is a bare necessity today and students are now left with no choice but to pay more to get quality education. Other concern is that there are many students who don't come from financially strong backgrounds, increased taxes may affect them badly. My own perception certainly is that education sector as a blanket should have been either left free of GST or not charged more than a 3, 4 or 5 per cent tax," said Naveen Chopra, Chairman, Education counselling firm The Chopra's .
However, not everyone agrees. Educationists such as CP Shrimali, Acting Director, MDI Gurgaon, believes GST in long run will have a positive impact on the economy as well as the education sector.
"I don't think a rise of 3 per cent in college fee or tax will make that big a difference to students or colleges alike. In the long term, I think colleges can pass on the benefit to students in the form of no fee hikes, which were otherwise around 7-8 per cent yearly, due to inflation" Mr Shrimali said.
Students enrolled and those planning to enrol in various coaching institutes in Kota had earlier appealed to Prime Minister Narendra Modi to exempt GST on the coaching fees.