The recently announced GST 2.0 reforms have introduced notable changes with a direct impact on the education sector—particularly benefiting parents of school-going children.

Prices of basic learning materials such as pencils, erasers, crayons, exercise books, graph books, and maps have seen their GST rate reduced from 12% to zero, bringing immediate relief to households across India.

Additionally, mathematical instrument sets and school bags will now attract a reduced GST of 5%, down from 12%.

In a move aimed at improving educational mobility, the GST on school buses (with more than 10 seats) has been lowered from 28% to 18%, while the tax on bicycles has been cut from 12% to 5%, making transportation more affordable for students, especially in rural areas.

These changes follow a simple economic principle—lower GST leads to higher demand.

The elasticity-driven response results in increased sales volume, with an estimated multiplier effect of 1.08x, boosting overall spending in the education-related goods market.

The reforms also include full restoration of GST exemptions for NSDC-approved vocational training programmes, keeping job-oriented skill development affordable and aligned with India’s skilling goals.

Meanwhile, the continuation of GST exemption on tuition fees—from preschool to university—supports universal education and contributes to achieving the UN Sustainable Development Goal (SDG) of Quality Education.

Moreover, the reduction in taxes on stationery and toys promotes demand for locally manufactured products, reinforcing the government’s “Vocal for Local” initiative and supporting MSMEs that cater to the education supply chain.

However, the reforms present a mixed picture. While they enhance affordability for students and parents, commercial training institutions remain taxed at 18%, and essential learning tools like laptops and pen drives also continue under the same rate.

Educational institutions, therefore, need to plan their infrastructure purchases—such as TV sets and air conditioners, which have seen a tax reduction from 28% to 18%—more judiciously.

Overall, GST 2.0 marks a positive step toward inclusive and rural-enabled growth, easing the financial burden on families while encouraging domestic production.

The reforms, though not uniformly beneficial across all educational segments, reflect a fair and forward-looking approach to strengthening India’s education ecosystem.

- By Dr. Gowri Ramachandran, Economist, Chartered Wealth Manager and Independent Director