The Tamil Nadu AAR has ruled that school bus fees are exempt from GST.

The applicant has registered as an unregistered applicant in GST portal on 09.02.2023 for filing advance ruling application under the category of service provider. The Applicant had enclosed a letter dated 03.02.2023, addressed to the Commissioner, wherein she had stated that she was approached by few schools in Chennai to provide transport service i.e. pick up and drop of their school children.

This transport service will be operated by providing school bus/van service only to the students studying in respective schools and not for the general public. 

She also stated that payment of fees will be collected directly from the parents of the students as per advice and agreement with school. She further stated that the teachers and staff will also be picked and dropped en-route for which the school will pay. Further the bus/van permits will be in the name of the respective school only.

The issue raised was whether the collection of transportation charges from parents will be taxed or exempted under GST, since only school students are only picked up and dropped, and school staff which will be covered in the agreement with school.

The AAR held that the Applicant propose to provide the service of picking up and dropping of school children and staff of higher secondary school in bus and/or by van by entering into an agreement with the schools. Further the bus and van permits will be in the name of respective schools. Thus, the Applicant’s proposed activity of providing transport services to the education institutions by way of transportation of students and staff, will become eligible for exemption vide of the Notification No. 12/2017-Central Tax (rate) dated 28.06.2017, if the services provided by the Applicant is to an educational institution as defined in Para No. 2(y) of the said notification and necessary permit has been obtained as mandated under the Tamil Nadu Motor Vehicles (Regulation and Control of School Buses) Special Rules 2012.