Books for next class – how do schools make money

By | April 3, 2016
Queue for school books for next class - speaking data

Queue for school books – speaking data

This is the time your child gets into a new class. This is the time also for buying books for next class.

It is now become a regular practice for the schools to issue books within the premises of the school. This is another form of business the schools get into. While the primary business is education, these are the ancillary businesses the school gets into. It is going to be a kind of coercion which the parents are drawn into. You will get a notification from the school that the books will be ISSUED on so and so date.

The bad part of this is that the school decides what you MUST buy for this year. and the list includes, pens, pencils, staplers etc, which are at least 25% excess of the requirement. You are not allowed to question the rationale on which the quantity is decided.

They also push you to buy notebooks which are in excess of requirement. in fact, even if you show the books which are issued by the school last year, you will get a stock answer. Sir, this change is need to be approved by the administrator, who will take endless 5 min to come to their seat. They will also say that these are the books for next class as decided by the school.

Now let us calculate the sales pushed by the school – on an average about 30 note books are sold against a requirement of 25.

5 books per student and for 1000 students – 5000 notebooks.

Average cost of Branded notebook – 40 Rs – 200,000 excess sale in 2 days.

In addition, there will not be any numbered invoice associated with it and all transactions must be done in cash only. in the above example, the average ticket size under the books for next class would be about 4000 for lower class and 6000 for higher classes.

Picking from this, the you can see the total size of sale for 1000 students will be about 600000 sale in 2 days at the most. Since everything is in cash, there will not be ta involved. Taking a minimum of 10% tax, the total works to 60000 INR. In addition, since the school purchases in bulk, there is additional margin for the bulk purchase. This is a minimum of 60000.

The Business of books for next class fetches about 120,000 for the school in two days. all tax free.

Now system has generated an unaccounted profit (Black Money) due to this cash transactions of 120,000.

Hope the tax authorities wake up and decide to collect the taxes the right way.

The numbers can be staggering if you calculate this for the entire country. Assuming 1000 schools in on city, this could be at least 12 crores per big city. Tax authorities please investigate the schools. not the small fish like employees