Construction of Educational Buildings is Taxable at Less GST

Gujarat Authority for Advance Rulings (AAR) stated construction of buildings such as hostels, bungalows, and staff housing for educational institutes is taxed at a lower rate on the Goods and Services Tax (GST) if the structure is not used for commercial activities for more than normal business purposes.

The court ruled that such a building would attract 12% of GST instead of the 18% charged for other construction activities. Please note that education is not subject to GST, however, construction work and the inputs used for it are taxable.

The applicant, Tirupati Construction, approached AAR to discover approximately the applicability of GST to these activities. The organization becomes presented as a works settlement for building a hostel and personnel quarters at a village in Surat by the Road and Building Department of the Gujarat government.

However, the activities or transactions carried out by the state government were not within the scope of the business and did not comply with the AAR.