Coaching Federation flags rising education costs, seeks GST relief

Ahead of the Union Budget, the Coaching Federation of India has urged the central government to ease the tax burden on coaching and supplementary education, arguing that the current Goods and Services Tax structure is making education costlier for families and unsustainable for smaller institutes.

In a representation submitted on Jan 28 to Finance Minister Nirmala Sitharaman, the Federation sought a reduction in GST on coaching services to 5% or a complete exemption.

CFI, which represents coaching centers across India, said the existing tax rate is directly inflating student fees and placing financial stress on both parents and operators.

The Federation pointed out that coaching institutes differ from manufacturing or trading businesses because they have limited scope to claim input tax credits. As a result, the full GST amount is passed on to students.

“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 said in its letter.

CFI emphasized that coaching has increasingly become essential for students preparing for competitive examinations.

Keshav Agrawal, vice president of the Federation, said, “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.”

The Federation also raised concerns over the existing GST exemption threshold of ₹20 lakh, calling it outdated in view of rising rents, staff salaries, and operational expenses.

It recommended increasing the exemption limit to ₹1 crore for coaching and supplementary education services. According to CFI, the current cap forces small centers with thin margins into the tax net, while larger institutions are better equipped to manage compliance.

CFI further argued that the present tax structure is distorting the sector by encouraging some coaching centers to remain unregistered or prompting parents to look for “no-GST” options.

Such practices, it said, increase informality and undermine quality and transparency across the industry.

The Federation said a more balanced tax regime would improve voluntary compliance and help make education more affordable. It also noted that the proposal is consistent with the objectives of the National Education Policy 2020.

Ahead of the Budget on Feb 1, CFI called for a stakeholder consultation with the finance ministry, seeking an opportunity to present ground-level data and concerns from smaller coaching centers.

The Federation maintained that as competitive exams continue to shape student outcomes, a clear and supportive tax policy is essential to keep coaching accessible.