With 18% GST, schools are unwilling to encourage sports education.

Will 18 pc GST on sports education be a death knell for investments in the sectorImage for representation
Atom Opinion Thursday, October 12, 2017 - 16:14
Written by  Parminder Gill

“India has huge potential in sports. It is a sports loving country. We have no shortage of talent. But we need to provide the right kind of opportunity and create an ecosystem to nurture the talent. A strong sporting culture can help the growth of a sporting economy,” Prime Minister Narendra Modi said on June 15, 2017, while inaugurating the Usha School of Athletics in Kinalur (Kerala).

Ideally, sports must find itself in safe hands in a country whose leader has such rich farsightedness about the sector. However, for athletes to win accolades at a global level, professional sports training is paramount. While professional sports training for advanced learners has existed for many years in our country, a complete systemic overhaul of sports in India requires organized sports training to trickle down to the grassroots or what we call the school level.

Identifying the need gap here, many sports education enterprises started building professional setups in-sync with schools to reach and groom talent from an early stage. But just when they thought they had acquired critical mass, a policy change halted their momentum.

This happened when the Goods and Services Tax was implemented in India on July 1, 2017. The sports education sector, which previously attracted no service tax liability, suddenly found itself in one of the highest GST tax brackets. An 18% GST has taken a toll on the very foundations on which this sector was rapidly building its base.

With an added 18%, schools are unwilling to come on board with the idea of sports education.

As per GST regulations, the schools don’t get GST input credits. They don’t have an option of charging higher fees to recover the taxes paid either.

In addition, the fee regulation measures taken by different states to cap the fee structure of the private schools has limited the discretionary resources available to schools to experiment with new tools and ideas.

And now, the introduction of GST now has virtually sounded the death knell for any investments or improvements – specifically in areas such as sports education in schools. It has applied brakes on all the cross-flow of ideas between the schools and the larger ecosystem. What’s also distressing is that apart from sports, all the other vocations have been exempted from GST.

With sports now being neglected, fewer children will play and participate in sporting activites as schools too, are steeping back from providing improved infrastructure.

In an era where childhood obesity and other health problems are on the rise amongst school-going kids, imposing heavy duty tax on sports training will further aggravate this issue. Sports is the most fun way of maintaining a healthy body, especially for kids. Taxation will only create an unfit nation.

It will also marginalize the already subservient sporting culture in India as pursuing sports as a career will become expensive.

The government has also decided to put the goods manufacturing industry into the 12%-28% tax slab, thus increasing the prices of sports equipment and making it difficult for quality equipment being made available to youngsters at the grassroots level.

To sum it up, this new rule change poses some critical questions on the government’s intentions. How can one expect a sporting culture to permeate into every nook and corner of the nation when the very catalysts of change in sports education are being discouraged by regulations? Won’t such harsh fiscal modifications discourage entrepreneurs who plan to take professional sports education to every school in India?

In order to ‘create an ecosystem to nurture the talent’, you need to proceed accordingly. Professional sports training at an early stage is the only way to ensure nurturing of sporting talent. By heavily taxing sports training start-ups, India might be losing its chance to international sporting glory. 

The views expressed here are of Parminder Gill, co-founder and head of business at sports education company EduSports