Rethink GST on rentals that schools pay

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Many members of different sectors are presenting their ideas to the finance minister for her consideration.

Many sectors need additional support without even being brought under consideration by the minister. One such sector is education.

It is one of the main pillars of society thus, needs more support from the government. Better the education of a nation then more the development and prosperity of the nation.

Unfortunately, the Indian government has not given the needed attention to the development of education. This led to skill acquisition problems and brain drain.

In the last budget, because of the pandemic, the government decided to switch a fraction of funds from education to strengthen the healthcare infrastructure. It was not criticised as it was the need of the hour.

The restrictions on schools adversely affected the sector, especially for the standalone schools. They had to close the doors. This resulted in job losses for staff and education discontinuity for children from poor families.

Even the government-aided schools were not spared, as many of them had to discontinue operations due to unavailability of proper devices, network issues and teachers’ inability to teach online.

In the private sector, the government issued directives of a fee reduction. This negatively impacted their finances. That was amidst the reinvestment of their resources to train staff and set up eLearning infrastructure.

To overcome this, the government should consider to apply these steps to overcome the crisis.

The first one is the wavering of GST on school rentals. In countries such as the UAE, the UK and the US, the schools are exempted from GST or are allowed to claim a refund of the GST paid.

But in India, most of the school trusts have a long-term lease with a third party and pay lease rents for a pre-decided period if they don’t own the land because of the high cost of land.

This rent is taxed under GST and these school trusts have to pay GST to landowners.

But unlike other GST payers, schools cannot claim the credit for the same, as the fees they collect from students are exempt from GST. This will force them to raise the fees which will burden the parents.

Secondly, offer loans at lower interest rates. Loans offered to schools should be considered priority sector lending. The pandemic forced the schools to cut down the fees. This was a relief for parents but for administrators, they had the excess burden of salary.

The schools have to invest in tech infrastructure. This exhausted their resources and because of schools falling under the ‘not for profit category banks do not offer them loans. This must be changed and they should be able to access loans.

Thirdly RTE reimbursement. It is a state subject, but with state treasuries under crisis, the schools have to wait indefinitely for RTE reimbursements. This should be supported by the central government.

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