Coaching federation seeks GST cut on coaching services ahead of Union budget

The Coaching Federation of India (CFI) has urged Finance Minister Nirmala Sitharaman to rationalise the Goods and Services Tax (GST) on coaching and supplementary education services in the upcoming Union Budget, warning that the current tax structure is driving up costs for parents and squeezing small coaching institutes.

In a representation submitted on January 28, the New Delhi-based federation, which claims to represent a large number of coaching centres across the country, sought a reduction in GST on coaching services to 5 per cent or a complete exemption . It argued that unlike manufacturing or trading businesses, coaching institutes have limited scope to claim input tax credit, making GST a direct burden on student fees.

“As a result, the Goods and Services Tax (GST) becomes a straight add-on to student fees, effectively shifting the burden to parents,” the federation said in its letter to the finance minister.

GST was introduced in India on July 1, 2017, and coaching and training services were brought under the 18 per cent tax slab. Industry representatives say that since then, course fees across major coaching hubs such as Kota, Delhi, Hyderabad and Patna have increased sharply. Many institutes passed on the full tax burden to students, leading to an estimated 15-20 per cent rise in overall coaching costs over the past few years, particularly for competitive exam preparation programmes.

Stressing that coaching can no longer be treated as a discretionary service, Keshav Agrawal , Vice President of CFI, said that with competitive examinations such as JEE, NEET, CUET, CA, CLAT, SSC and UPSC becoming central to academic and career pathways, coaching has become a necessity for middle-class families.

In its submission, the federation also flagged the existing GST exemption threshold of Rs 20 lakh as outdated in an era of rising rents, salaries and operational expenses. It proposed raising the exemption limit to Rs 1 crore for coaching and supplementary education services, arguing that the current cap forces even small centres with thin margins into the tax net while larger chains benefit from scale and stronger compliance capacity.

According to the CFI, the present tax regime is also distorting the sector by encouraging informality. Some small coaching centres prefer to remain unregistered, while parents increasingly look for “no-GST” options to reduce expenses.

The federation said a more balanced tax structure would improve voluntary compliance, make education more affordable and align with national objectives under the National Education Policy (NEP) 2020.

It also sought a stakeholder consultation with the finance ministry to present ground-level data and industry concerns before the Union Budget is presented on February 1.