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How to Start Preschool In India?

How to Start Preschool In India?

By CA Ankit Gulgulia (Jain)

Starting a preschool is a good choice if you have nurturing spirit, plenty of energy and interest in stimulating young minds. In this business, you will provide supervision, fun activities and educational opportunities for small children. In most cases, starting a preschool business means working with 3- to 5-year-old children. You can run a preschool business out of your home, in many areas, or from a commercial space.
Image result for Pre- School
With growing disposable incomes and employment among women, playschools for toddlers are becoming a lucrative business opportunity, especially for young women.
So, we can say that it is good business opportunity which helps you in utilise your resources and invest in society’s future.
Broadly we can classify the preschool business in two types Residential preschools and other than residential preschools. In residential preschool there is no such compliance of law required. You need to have proper area in school with some basic infrastructure as per requirement of children.
On other hand in case of other than residential preschool or we can say full service play school there is requirement of compliance of law as per their respective states.
  1. Residential preschool
A preschool can also be started from a place of residence. For this, the permission of cooperative housing society or apartment association would be needed. Furthermore, in case the residential area is acquired on rent/lease, the purpose of using the residential area for running a play school should be clearly mentioned in the lease agreement.
  1. Legal Regulations on preschool other than residential preschool
Before you start a pre-school, which is other than residential preschool, you may need to keep a few things in mind about the legal regulations that need to be complied with which are as follows:

  1. Legal Entity of the Business
    1. In case of incorporating a school as profit making institution you have option to register your entity (school) as one of the followings:
      1. Private limited company or
      2. as limited liability partnership firm or
      3. enter into a franchise agreement.
    2. If you are going for non profit making institution then register your school as per Section 8 of The Companies Act, 2013, (Section-8 states that a company can be established ‘for promoting commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment or any such other object, provided the profits, if any, or other income is applied for promoting only the objects of the company, and no dividend is paid to its members.)

  1. Application to the Directorate of Education: You need to make an application to the Directorate of Education in your state, for which you need to show financial capability, create a public trust / charitable institution to run the school with, ensure that the land is in the name of the promoter (you) and maintain a Fixed Deposit in the name of the school as proof of financial strength.

  1. Affiliation from board of studies: You will need to get affiliated with a certain board, which again requires a lot of procedures to be complied with. Every board (for example, the CBSE) has a detailed list of guidelines to be complied with by every school under that board.

  1. Compliance of state specific law: Finally, you need to comply with all the State-specific laws. To take the example of Delhi, schools there are subject to The Delhi Schools Education (Regulation) Act, 1973.
Many states have their own laws governing schools, which contain detailed procedures for the appointment and dismissal of teachers and maintenance of accounts of the school.

  1. The Shop and Establishment act is not applicable: The Shops and Establishments Act, in general, is silent in case of a playschool, that is a play school need not be registered under the said act, however as the regulations are different for every state, the act of the state where the preschool is proposed to be set up needs to be carefully studied and verified in order to reach to any conclusion.

  1. Labour Law of the respective state need to be followed: For instance, the minimum wages for primary schools is Rs. 80 per day but these tend to vary from state to state and are to be accordingly paid. Also In case of the number of employees being more than 20, Employees Provident Fund schemes and Payment of Bonus Act, 1965 are to be considered.
Some general points needs to be consider while starting the preschool are:
  1. Research: Starting a preschool is a great idea. The most important thing is about research. One must research in the area and the scope wherein the preschool will attract children. The criteria of accessibility are a plus point and perhaps you can think of pick-up and drop service to facilitate the same. It is imperative to finalize on costs, rent of the property, investments in terms of teaching aids and furniture to understand how you can position your preschool and gaining popularity in the first year itself.
  2. Finance and Marketing: Finance and marketing play a significant role in the initial planning stage. Finance is required at every stage of planning. Marketing is done to make preschool popular. Another important thing about having a preschool is constantly marketing so that the brand name is heard and registered in the minds of people.
  3. Recruiting of Teaching and administration staff: As per National council for Teacher Education (NCTE) guidelines, a preschool teacher must have a Secondary School certificate or its equivalent and preferably a Diploma/Certificate in Pre-school teacher education programme of not less than one year, or B.Ed.
  4. Formulation of Good Syllabus: Preschool teaching is also about finalizing a good syllabus. It is good to understand that you can also follow the idea of taking a franchise to start your own school. You will receive standard lesson plans and you can use the same effectively. For independent preschools the task of formulating a curriculum is essential. The expertise of a consultant can be hired to give it a professional touch.
  5. Creating Brand Value: This can be done only by giving the right kind of guidance and direction to teachers who will bring out the best in the students. Children are very adaptable to what is being guided and hence the valuable education given by the teachers will project a good name for the preschool. It is also good to research and find what you can include as a novel idea before starting a preschool.  
Service Tax Applicability for Schools
As per Notification No. 25/2012 of Service Tax the following services are exempt from the whole service tax leviable thereon under section 66B namely:-
Services provided,-
         (a) by an educational institution to its students, faculty and staff;
(b) to an educational institution, by way of,
(i) transportation of students, faculty and staff
(ii) catering, including any mid-day meals scheme sponsored by the Government
(iii) security or cleaning or house-keeping services performed in such educational institution
(iv) services relating to admission to, or conduct of examination by, such institution;
Hence any other services except (a) and (b) provided by education institution are taxable under service tax.
Income tax applicability
As per section 10(23C) of The Income Tax Act. 1961 income from educational institution is exempt. Relevant Section are as follows:
(iiiab) Any University or other educational institution Any University or other educational institution existing solely for educational purposes and not for existing solely for educational purposes and not for purposes of profit, and which is wholly or substantially purposes of profit, and which is wholly or substantially financed by the Government. financed by the Government.
(iiiad) Any University or other educational institution Any University or other educational institution existing solely for education purposes and not for existing solely for education purposes and not for purposes of profit if the aggregate annual receipts of purposes of profit if the aggregate annual receipts of such university or educational institution do not such university or educational institution do not exceed the amount of annual receipts as may be exceed the amount of annual receipts as may be prescribed. (Amount prescribed is Rs. 1 Crore) prescribed. (Amount prescribed is Rs. 1 Cr.
vi) Any University or other educational Any University or other educational institution existing solely institution existing solely for educational purposes for educational purposes and not for purposes of profit, other than those and not for purposes of profit, other than those mentioned in ( mentioned in (iiiab) or sub clause or sub clause (iiiad) and which ) and which may be approved by the may be approved by the prescribed authority. prescribed authority
India’s population is 2nd largest in India and children in age group 0-6 is about 158.7 million i.e. 16% of total Indian population. So there is a rising demand and importance of education at preschool. Preschool education in India is worth Rs 8,000 Cr. as an industry and growing at a rate of 35% on a yearly basis .
In today’s era of increasing competition and demand for quality, starting a Preschool in India is not only a lucrative business opportunity but also a Social and ethical responsibility which along with economic gains provides a sense of moral satisfaction. Thus by carefully formulating a business plan; choosing the suitable form of entity and considering applicable legal requirements, a preschool can be successfully started in India.


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