GST Exemption for ICT Projects in Government Schools
The Appellate Authority for Advance Ruling confirmed that ICT projects in government schools qualify for GST exemption as composite training services.
- Ruling
- MAH/AAAR/SS-RJ/18/2018-19 dated 04.02.2019
- Authority
- Appellate Authority for Advance Ruling
This page was written by Patron Accounting’s AI from the official release and reviewed before publishing. It explains the document in plain language. It is not the document itself. Where this page and the original differ, the original governs.
The short version
- The company asked if their ICT project qualified for GST exemption.
- The project involved supplying hardware and training to government schools.
- The authority ruled the project is a composite supply of training services.
- The entire project qualifies for exemption under Entry No. 72.
In short
The company asked if their ICT project, which combines hardware supply and computer training for government schools, is exempt from Goods and Services Tax (GST).
What has changed
How it worked before
Businesses were uncertain if bundling hardware supply with educational services would disqualify the entire contract from GST exemptions.
What has changed
The authority decided that because the main goal is providing education, the hardware is just a supporting part of the service. This means the whole project can be treated as an exempt training service rather than a taxable supply of goods.
Who this affects
Service providers implementing ICT or educational projects for government bodies under a Build, Own, Operate and Transfer (BOOT) model.
An example
A private firm signs a contract to provide digital classrooms and teacher training to a state government. They wonder if they must charge GST on the hardware portion. Based on this ruling, if the training is the main purpose and the hardware is just a tool to deliver it, they might argue the entire project is exempt.
What you should do
This ruling only applies to the specific company that asked for it. If you run a similar project, you cannot automatically claim this exemption; you must evaluate your specific contract and consult a tax professional to see if your facts match this decision.
If you do nothing
If you assume this ruling applies to you and stop collecting GST without a formal opinion, you risk a tax demand, interest, and penalties. A tax officer may view your contract differently and classify your hardware supply as a taxable sale, leading to significant unexpected costs.
The terms explained
- Composite supply
- A package of goods or services that are naturally bundled together and provided as a single unit, where one part is the main service.
- BOOT model
- A contract structure where a company builds infrastructure, operates it for a set time, and then transfers it to the government.
- Ancillary
- Something that is secondary or supporting to the main activity.
The ruling in detail
Appellate Authority for Advance Ruling
IL&FS Education and Technology Services Ltd.
MAH/AAAR/SS-RJ/18/2018-19 dated 04.02.2019 · Maharashtra
Questions before the authority
- Whether the supplies of goods and services by the Appellant to the Director of Education (S & HS) qualify for exemption in terms of Entry No. 72 of Notification No. 12/2017- C.T. (Rate).
Facts
The Appellant entered into an agreement with the Director of Education (S & HS), Maharashtra, to implement an ICT project in government and government-aided schools under a Build, Own, Operate and Transfer (BOOT) model. The project involves supplying computer hardware, software, and site preparation, alongside providing computer training services to students and teachers for a period of five years. The Appellant sought an advance ruling on whether these supplies qualify for the exemption under Entry No. 72 of Notification No. 12/2017- C.T. (Rate).
Ruling
| Question | What the authority ruled |
|---|---|
| Applicability of exemption under Entry No. 72 of Notification No. 12/2017- C.T. (Rate) | The supplies qualify for exemption. The authority determined the arrangement is a composite supply with computer training as the principal supply. |
The Appellate Authority for Advance Ruling modified the original order and held that the supplies of goods and services by the Appellant to the Director of Education (S & HS) qualify for the exemption under Entry No. 72 of Notification No. 12/2017- C.T. (Rate). The authority concluded that the arrangement constitutes a composite supply where the principal supply is the provision of computer training services.
Reasoning
The authority reasoned that the project is a **composite supply** where the provision of computer training is the principal supply, and the supply of hardware and infrastructure is ancillary to achieving the objective of imparting education. It noted that the entire expenditure is borne by the government and the services are provided under a training programme, satisfying the conditions of Entry No. 72. The authority rejected the view that the supply was artificially bundled, emphasizing that the **nature of the project** as a whole is to provide education, not merely to supply hardware. It relied on the definition of composite supply under Section 2(30) of the CGST Act.
Provisions relied on
- Section 2(30) of the CGST Act
- Section 8 of the CGST Act
- Entry No. 72 of Notification No. 12/2017- C.T. (Rate)
For the practitioner
This ruling is highly beneficial for service providers operating under government-led ICT or educational projects using a BOOT model, as it confirms that such arrangements can be treated as **exempt composite supplies** of training services. It clarifies that the inclusion of hardware and infrastructure does not necessarily disqualify the entire contract from exemption if the principal objective is training. However, practitioners should note that this decision is highly fact-specific regarding the **predominant nature of the contract** and the funding structure.
Source
This is a summary prepared from the published order, which is a scanned document. It is a reading aid and not the authority: where the two differ, the order governs. Verify every provision against the original before relying on it.
Original order: https://www.gstcouncil.gov.in/sites/default/files/2024-02/mah.aaar_ssrj.18-2018-19_04.02.19.pdf
Legibility of the scan, as read: high.
Prepared 13-10-2026.
About Patron Accounting LLP
Patron Accounting LLP is a CA and CS-led accounting and compliance firm that has been working with businesses across India since 2019. We handle the work that keeps a company correct with every department it answers to: day-to-day bookkeeping and accounting, GST registration and returns, income tax filing and assessments, TDS, payroll and PF/ESI, company and LLP incorporation, ROC and MCA compliance, statutory and internal audit, physical stock and inventory audits, trademark and other registrations, and the certificates and reports that banks, buyers and regulators ask for.
Our clients range from a first proprietorship registering for GST to established companies running operations across several states. Much of our work is exactly this: reading what a department has published and telling a business, in plain terms, whether it changes anything for them.
We operate from five offices and serve clients across the rest of India remotely:
- Pune (HQ): RTC Silver, B4-708, Sai Satyam Park, Wagholi, Pune, Maharashtra 412207
- Mumbai: 104, Rajshila Building, 597 J.S.S. Road, Marine Lines, Mumbai 400002
- Delhi: 3rd Floor, B-6/154-155, Sector 5, Rohini, Delhi 110085
- Gurugram: Pioneer Urban Square, B109, Golf Course Ext Road, Sector 62, Gurugram 122098
- Ahmedabad: Phoenix Tower, 1107, near Commerce Six Road, Drive In Road, Navrangpura, Ahmedabad, Gujarat 380009
If anything on this page affects you and you would like somebody to look at your own position, we are glad to help. Call +91 94594 56700, write to sales@patronaccounting.com, or visit patronaccounting.com. The first conversation costs nothing.