Looking for expert help with GST on playschool fees and income tax for day care owners India? The team at Tax Garden, based in Kondapur, Hyderabad, helps Indian SMEs stay compliant. End-to-end filings, notices, and deadline tracking, all in one place.
Key Takeaways
- Playschool and pre-school fees are exempt from GST: S. No. 66(a) of Notification 12/2017-Central Tax (Rate) covers services by an institution providing pre-school education to its students.
- Day care or creche fees are a different service: SAC 999351, taxed at 18% under heading 9993.
- Your school van, catering, security and housekeeping vendors shouldn't charge you GST (S. No. 66(b)).
- A playschool with only exempt fees needs no GST registration. Add day care, and the Rs 20 lakh limit counts your exempt fees too.
- Proprietors can use Section 44AD for FY 2025-26. Audited returns for AY 2026-27 are due by 21 November 2026 (CBDT Circular 07/2026).
Is GST applicable on playschool fees? No. Fees charged by a playschool, nursery or kindergarten to its students are exempt under S. No. 66(a) of Notification 12/2017-Central Tax (Rate), because the notification's definition of "educational institution" includes one providing pre-school education. Day care or creche charges are not education: they fall under SAC 999351 and attract 18% GST.
Most playschool owners are told "education is exempt" and stop there. That's right for the morning programme, but many centres now run an afternoon day care, sell a uniform and book kit at admission, and pay a franchise fee to a brand. Each of those has its own GST answer, and the day care line can make you liable to register even when it's a small part of your income. This guide covers GST in force after the 22 September 2025 rate changes, and income tax for FY 2025-26 (AY 2026-27) under the Income-tax Act 1961, with the TDS rules of the Income-tax Act 2025 that apply from 1 April 2026.
Why are playschool fees exempt from GST?
Two entries in Notification 12/2017-Central Tax (Rate) do the work. S. No. 66(a), under heading 9992, exempts services "provided by an educational institution to its students, faculty and staff". And paragraph 2(y) of the same notification defines an educational institution as one providing services by way of "(i) pre-school education and education up to higher secondary school or equivalent".
CBIC's Explanatory Notes to the Scheme of Classification of Services describe pre-primary education (SAC 999210) as education "usually provided by nursery schools, kindergartens, pre-schools, centres for early childhood education". So tuition, admission and activity fees that are part of your pre-school programme are exempt.
Note how the definition is worded. Clause (ii) covers education for "a qualification recognised by any law", but clause (i), the pre-school limb, carries no recognition condition in its text. We didn't find a CBIC circular that deals with unaffiliated playschools. If your centre's status is unclear, say a franchise outlet offering only hobby sessions, get advice before treating fees as exempt.
Comparison
GST on What a Playschool Charges or Sells
| What you charge | Code | GST | Source |
|---|---|---|---|
| Pre-school tuition, admission and programme fees to your students | SAC 999210 | Exempt | Notif 12/2017-CT(R), S. No. 66(a) and para 2(y)(i) |
| Day care or creche (daytime care after or outside class hours) | SAC 999351 | 18% | Notif 11/2017-CT(R), S. No. 31 (heading 9993) |
| Printed books; children's picture, drawing or colouring books | 4901, 4903 | Nil | Notif 10/2025-CT(R), S. Nos. 132, 134 |
| Exercise books and notebooks | 4820 | Nil | Notif 10/2025-CT(R), S. No. 130 |
| Pencils, crayons, pastels, chalk | 9608, 9609 | Nil | Notif 10/2025-CT(R), S. No. 163 |
| Uniforms, sale value up to Rs 2,500 per piece | 61, 62 | 5% | Notif 9/2025-CT(R), Sch I, S. Nos. 388, 389 |
| Uniforms, sale value above Rs 2,500 per piece | 61, 62 | 18% | Notif 9/2025-CT(R), Sch II, S. Nos. 197, 198 |
Source: Notifications 11/2017 and 12/2017-Central Tax (Rate) as amended; Notifications 9/2025 and 10/2025-Central Tax (Rate), effective 22 September 2025; CBIC Explanatory Notes to the Scheme of Classification of Services
Services you buy are exempt too. S. No. 66(b) exempts services provided to an educational institution by way of transport of students, faculty and staff; catering; security, cleaning or housekeeping performed in the institution; and services relating to admission or exams. The proviso limits this to institutions providing pre-school to higher secondary education, which includes you. If your van operator or housekeeping agency adds 18% to its bill, show them the entry. Our tourist bus operators guide explains the same exemption from the operator's side.
Day care is a separate service at 18%
The Explanatory Notes say the pre-primary education code "does not include child day-care services, cf. 999351". SAC 999351 covers "provision of daytime shelter and elementary play-related teaching to small children (day-care services) in nursery school". It sits under heading 9993, human health and social care services, which S. No. 31 of Notification 11/2017-Central Tax (Rate) taxes at 9% central tax, 18% in all. Notification 15/2025-Central Tax (Rate), the services rate change of 22 September 2025, didn't amend S. No. 31.
So a centre that runs class from 9 to 12:30 and keeps children until 6 for working parents is making two supplies: an exempt pre-school service and a taxable day care service.
Bill them as separate fee heads. The CGST Act's definition of a composite supply (Section 2(30)) talks of "two or more taxable supplies", so a single fee that mixes an exempt service with a taxable one doesn't fit it neatly. We found no CBIC clarification on a combined playschool-plus-day-care fee. Two lines on the fee receipt, one for the programme and one for day care, avoid the argument.
Do you need GST registration?
Step-by-Step Guide
GST Registration Check for a Playschool
1. List every fee and sale
Programme fees, day care, summer or holiday care, uniform and book kits, transport if you charge it.
2. Only exempt fees and nil-rated goods?
No registration needed. Section 23(1)(a) excludes a person supplying exclusively exempt goods or services.
3. Any taxable line (day care, 5% or 18% uniforms)?
Add up aggregate turnover: taxable plus exempt supplies, on all-India basis for your PAN (Section 2(6)).
4. Above Rs 20 lakh in the year?
Register under Section 22. In some special category states the limit is Rs 10 lakh.
Result
Once registered, charge GST only on the taxable lines. Exempt fees stay exempt, but they go into GSTR-1 and GSTR-3B as exempt supplies.
Source: Sections 2(6), 22 and 23(1)(a), CGST Act 2017
Example: a playschool in Hyderabad collects Rs 22 lakh of programme fees and Rs 4 lakh of day care fees in a year. Aggregate turnover is Rs 26 lakh, above Rs 20 lakh, so it must register, though only Rs 4 lakh is taxable. At 18% on a Rs 4 lakh fee, the GST is Rs 72,000. Had it run no day care, it wouldn't need to register at all, however large its fees.
The 6% option for small centres. Notification 2/2019-Central Tax (Rate), read with Section 10(2A) of the CGST Act, lets a registered service provider pay 3% central tax (6% with the state share) on its supplies, without input tax credit. The conditions include aggregate turnover of Rs 50 lakh or less in the previous year (your exempt fees count) and no inter-State outward supplies. In the example above, 6% on Rs 4 lakh is Rs 24,000 against Rs 72,000. Section 10(4) bars you from collecting tax from the recipient, so the 6% comes out of your day care fee. Our GST composition scheme guide covers how to opt in.
Input tax credit is limited. Under Section 17(2) of the CGST Act, credit on inputs and services used partly for exempt supplies is restricted to the share used for taxable ones. Rent, franchise fees and furniture serve both your exempt programme and your day care, so most of the GST on them stays a cost. Rule 42 of the CGST Rules sets out the split.
Income tax for playschool owners
Section 44AD is open to you. For FY 2025-26, Section 44AD of the Income-tax Act 1961 deems profit at 8% of receipts, or 6% of receipts received through account payee cheque, bank transfer or other electronic modes, or a higher figure you declare. It applies to resident individuals, HUFs and firms (not LLPs) with receipts up to Rs 2 crore, or Rs 3 crore if cash receipts are within 5%. Section 44AD(6) excludes the professions named in Section 44AA(1): legal, medical, engineering, architecture, accountancy, technical consultancy, interior decoration and any notified profession. Running a playschool isn't on that list. From 1 April 2026 the same scheme sits in Section 58 of the Income-tax Act 2025.
Fees paid by UPI or bank transfer count at 6%. If you collect cash at the gate, those receipts count at 8%, and too much cash can also push you past the 5% condition for the higher limit.
Example (proprietor, new tax regime, FY 2025-26): fees of Rs 38 lakh, all by UPI and bank transfer. The 44AD floor is 6%, Rs 2.28 lakh, but the owner's actual profit after teachers' salaries, rent and the franchise fee is Rs 12.5 lakh, and that's what they declare.
- Rs 0-4 lakh: nil.
- Rs 4-8 lakh at 5%: Rs 20,000.
- Rs 8-12 lakh at 10%: Rs 40,000.
- Rs 12-12.5 lakh at 15%: Rs 7,500.
- Tax before rebate: Rs 67,500. Income is above Rs 12 lakh, so there's no Section 87A rebate, but marginal relief caps the tax at the Rs 50,000 of income above Rs 12 lakh.
- Tax after marginal relief: Rs 50,000. Cess at 4%: Rs 2,000. Total: Rs 52,000.
Tax Rate Chart
New Tax Regime Slabs, FY 2025-26 (AY 2026-27)
Up to Rs 4 lakh
Rs 4-8 lakh
Rs 8-12 lakh
Rs 12-16 lakh
Rs 16-20 lakh
Rs 20-24 lakh
Above Rs 24 lakh
Source: Section 115BAC(1A), Income-tax Act 1961, as amended by Finance Act 2025
If you use 44AD, the whole year's advance tax is due in one instalment by 15 March (Section 211(1)(b)). Our Section 44AD guide covers the five-year rule if you later move to books.
TDS you deduct from 1 April 2026. Section 393(1) of the Income-tax Act 2025 depends on whether you're a "specified person" (Section 402(37)): a company or firm, or an individual or HUF whose business turnover exceeded Rs 1 crore in the previous tax year.
Comparison
TDS a Playschool Deducts (Tax Year 2026-27)
| Payment | Specified person (firm, company, or turnover above Rs 1 crore) | Other individual or HUF | Section 393(1) Table |
|---|---|---|---|
| Rent of building, above Rs 50,000 a month | 10% | 2%, deducted for the last month of the year or tenancy | Sl. No. 2(ii)(b) and 2(i) |
| Franchise royalty to the brand, above Rs 50,000 | 10% | Not listed in Sl. No. 6(ii) | Sl. No. 6(iii)(d) |
Source: Income-tax Act 2025, Section 393(1) Table and Notes; Section 402(37)
Our TDS on rent guide has the FY 2025-26 rules under Sections 194-I and 194-IB.
Deadlines right now. If your FY 2025-26 accounts were audited, the return is due by 21 November 2026 (CBDT Circular 07/2026). If you weren't liable to audit and missed the 31 July or 31 August 2026 due date, you can file a belated return under Section 139(4) until 31 December 2026, with a late fee of Rs 5,000, or Rs 1,000 if total income is within Rs 5 lakh (Section 234F).
Common mistakes playschool owners make
- Charging GST on programme fees. Pre-school education to your students is exempt. Adding 18% to the fee bills parents for tax the law doesn't levy.
- Ignoring day care. It's 18%, and its fee can make you liable to register because exempt fees count towards the Rs 20 lakh limit.
- One lump "annual fee". Show the programme fee, day care and any kit separately on the receipt.
- Paying GST to your van, canteen or housekeeping vendor. S. No. 66(b) exempts these services when provided to a pre-school.
- Claiming full credit on rent and franchise fees. Section 17(2) limits credit to the share used for taxable supplies.
How Tax Garden helps playschools and day care centres
We review your fee structure so exempt and taxable heads are billed separately, check whether day care puts you over the GST registration limit, and file GST returns once you're registered. Our accounting and bookkeeping service keeps fee collections, cash and franchise payments reconciled, and at year end we file through our ITR filing service. If you also run tuition or coaching classes, see our coaching centre owners guide, and for schools and colleges, our GST on educational institutions guide.
