New Delhi: The Coaching Federation of India on 29 January wrote a letter to Finance Minister Nirmala Sitharaman asking for a reduced GST burden on coaching services and raise the exemption threshold for coaching institutes from Rs 20 lakh to Rs 1 crore.
The CFI said that the current GST on coaching institutes increases education cost for parents, penalising affordability in supplementary learning, and is predominantly affecting the middle class.
“CFI proposes reducing GST on coaching services to 5 per cent or NIL and raising the GST exemption threshold from Rs 20 lakh to Rs 1 crore for small institutes to protect MSMEs (Micro, Small, and Medium Enterprises) and improve compliance,” a statement released by the federation read.
“GST relief is not a concession to coaching centres — it is a relief to the parents and students,” said CFI President Saurabh Saxena.
With the upcoming Union Budget 2026, the CFI has strongly advocated using the opportunity to reform certain elements of India’s GST framework related to coaching and supplementary education services.
In the letter addressed to Sitharaman, the federation has said that coaching is no longer a luxury but a “practical necessity” for students preparing for board examinations and competitive tests.
“It has become an important part of the education system as students take help from coaching, preparing for exams such as JEE, NEET, CUET, CA, CS, CLAT, SSC, banking and UPSC. The CFI noted that taxing coaching services directly raises the final fee paid by families, effectively transferring the tax burden to parents rather than institutions,” said Keshav Aggarwal, vice-president of CFI.
“This is not merely a taxation issue. GST on coaching ultimately becomes a tax on aspiration. Any GST relief on coaching services is actually a relief to parents and students,” Agarwal added.
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The CFI’s suggestions
The federation also said that most coaching institutes have a limited input tax credit (ITC) eligibility because their primary expenses are salaries and academic delivery costs. As a result, GST becomes a direct cost addition rather than a pass-through tax in a value chain, further inflating fees for students.
The CFI recommended either a nil GST rate or a maximum of 5 per cent on academic coaching and competitive exam preparation services. It also proposed differentiated taxation, suggesting that premium or optional ed-tech and luxury learning services could be taxed at higher rates, while student-focused academic support receives targeted relief.
On the exemption threshold, the federation said the current Rs 20 lakh limit has effectively remained unchanged for over two decades, despite sharp rises in inflation and operational costs. It argued that small and mid-sized institutes are forced into the tax net too early, increasing compliance costs and creating an uneven playing field in favour of large corporate coaching chains.
According to the CFI, raising the threshold to Rs 1 crore would protect MSMEs, support affordable education, reduce tax avoidance pressures and strengthen long-term GST compliance. It added that the current policy unintentionally encourages many small centres to remain unregistered to stay competitive on fees.
“Current structure pushes institutions into informality, and a balanced GST policy can ensure affordability, equity and compliance together — while strengthening India’s human capital,” said Vice-President (PR) of CFI Ashish Gambhir.
(Edited by Insha Jalil Waziri)