Supreme Court Boosts Overseas Education Sector: GST Not Applicable on International Admissions
The Supreme Court of India has delivered a significant ruling in favour of KC Overseas Education, dismissing a Goods and Services Tax (GST) department petition. The decision, which aligns with a previous March ruling, has far-reaching implications for the overseas education consulting sector.
The GST department had argued that study-abroad consultants act as 'intermediaries', making them liable to pay GST. However, the Supreme Court ruled that services provided by Indian entities to international universities for student admissions, under direct contract and consideration, do not fall under this category.
This ruling could set a strong precedent for the broader sector. It clarifies that commission earned in foreign currency from international universities for facilitating students' overseas education is not liable to GST. This decision is expected to enhance India's competitiveness in the international education value chain by reducing the tax burden on service exporters and making Indian intermediaries more attractive partners for international institutions.
The GST Council has recommended amending the law to clarify the definition of 'intermediary services'. This could provide financial relief and resolve show-cause notices amounting to Rs. 3,357 crore issued to organisations in high-export sectors. The amendment is likely to be prospective, applying only to invoices raised after the law comes into effect.
The Supreme Court's ruling and the impending GST Council amendment bring much-needed clarity to the overseas education consulting sector. They stand to benefit the industry by reducing the tax burden and encouraging international partnerships, ultimately boosting India's global education exports.
