Indian study-abroad sector cheers GST relief on int’l commissions
On August 25, the Supreme Court of India dismissed a Special Leave Petition (SLP) filed by the Goods and Services Tax (GST) department against KC Overseas Education, upholding a March 3 ruling that services by Indian entities to international universities for student admissions under direct contract and consideration are not “intermediary” supplies.
The long-drawn legal battle marks a “pivotal moment for the overseas education ecosystem in India”, according to Pankaj Agrawal, CEO and co-founder of KC Overseas, which partners with over 950 international universities across major study destinations and recruits students from 11 countries, including India, Bangladesh, Nepal, Sri Lanka, Pakistan, Nigeria, Ghana, Kenya, Vietnam, Indonesia, and the Philippines.
“The Court has now clarified that commission earned in foreign currency from international universities for facilitating students’ overseas education qualifies as export of services and is not liable to GST,” stated Agrawal.
“For consultants, it means stronger margins, room for reinvestment in technology, student services, and global reach. For the industry, it recognises education consulting as an export sector, aligning India with global practices.”
The GST department has previously argued that study-abroad consultants are ‘intermediaries’ liable to pay GST, even issuing summons and notices to dozens of consultants for allegedly evading nearly Rs. 600 crores (over £52 million) in taxes.
While many cases filed as challenges against the GST department’s earlier notices remain under litigation, the recent court rulings could set a strong precedent for future legal decisions for the broader overseas education consulting sector.
“This [Supreme Court] ruling will especially help other study-abroad consultancies that receive foreign exchange directly from overseas universities. They will now have greater certainty and protection,” Videh Agrawal, director, KC Overseas, told The PIE News.
“The decision brings hygiene into the system. It will save margins for consultants, improve compliance, and ultimately strengthen the sector as a whole.”
For consultants, it means stronger margins, room for reinvestment in technology, student services, and global reach
Pankaj Agrawal, KC Overseas Education
The decision by India’s apex court came as the GST Council recently recommended amending the law to clarify the definition of “intermediary services”.
“The Council recommended omission of clause (b) of section 13(8) of IGST Act 2017. Accordingly, after the said law amendment, the place of supply for ‘intermediary services’ will be determined as per the default provision under section 13(2) of the IGST Act, 2017, ie the location of the recipient of such services,” read a statement released by the Indian government post their GST council meeting on September 3.
“This will help Indian exporters of such services to claim export benefits,” the statement added.
According to a report by Indian financial news outlet Moneycontrol, the amendment, once in effect, could not only provide financial relief but also help resolve show-cause notices amounting to Rs. 3,357 crore (approximately £319 million) that have been issued to organisations in high-export sectors.
In the lead-up to the GST Council’s recommendation, the Association of Australian Education Representatives in India (AAERI), along with several other companies, made submissions to the Ministry of Finance’s Customs and Central Excise Department – a “multi-year effort” hailed by Ravi Lochan Singh, managing director of Global Reach and former AAERI President.
“In line with its mission statement, Global Reach was the first to seek an advance ruling in 2017. However, it received an adverse ruling in accordance with council regulations. This prompted several universities agree to pay the Indian GST component on invoices,” stated Singh, in a LinkedIn Post, adding that AAERI had engaged Deloitte to submit its representations.
While these rulings and recommendations mean GST unregistered partners would now receive full commission earnings without an 18% GST reduction, invoices raised by sub-agents to aggregators outside Special Economic Zones (SEZs) will not be treated as zero-rated.
“The invoices of the subagents will not be deemed at zero rated GST since they are from an Indian entity to an Indian entity unless the parent aggregator has located itself in an SEZ,” stated Singh.
KC Overseas has maintained that, even in such circumstances, registered partners stand to benefit from GST relief owing to the consultancy’s location in an SEZ.
“With KC Overseas transitioning to the Mihan Special Economic Zone (SEZ) in Nagpur, supplies to SEZ units are classified as zero-rated inter-State supplies under Section 16(1)(b) of the IGST Act, 2017,” stated Trilokchandra Chandak, associate director, accounts and finance, KC Overseas.
“Consequently, no GST will be charged on invoices raised to KC Overseas, ensuring transparency and benefits for both registered and uniregistered partners.”
Moreover, since the amendment is likely to be “prospective” in nature, it would apply only to invoices raised after the law is notified and comes into effect, AAERI noted, with past transactions not automatically covered and GST already paid on earlier supplies not eligible for refund solely on this basis.
According to Sripal Jain, co-founder of Simandhar Education and a Chartered Accountant, the rulings enhance India’s competitiveness in the international education value chain by reducing the tax burden on service exporters, preserving margins for consultancies, and making Indian intermediaries more attractive partners for international institutions.
“While the government forgoes GST on these receipts, the broader economic logic: encouraging exports of services, protecting cross-border trade neutrality, and supporting a growing education export ecosystem makes financial sense. The key is to pair this with robust compliance and transparent reporting so that scale and economic activity created can be monetised through other sensible tax measures,” stated Jain.
According to Jain, even if direct GST is not collected on overseas education fees, the government can still capture revenue through corporate and income taxes, withholding regimes and treaties, indirect domestic taxation via value chains, targeted digital or service levies, and modest regulatory fees linked to facilitation.
“Exemption from GST on exported educational services does not mean the economy or the exchequer is left without recourse. The focus should be on ensuring that export growth converts into taxable activity elsewhere (profits, wages, domestic consumption) while maintaining the competitiveness of Indian service providers,” he added.
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