3 min readNew DelhiUpdated: Jul 15, 2024 07:17 AM IST
As part of its Budget expectations, a key skilling organisation backed by the government has recommended to the Finance Ministry several direct and indirect tax breaks that should be made available to individuals and institutions that are looking for, and providing, skill development training, The Indian Express has learnt.
The National Skill Development Corporation (NSDC) has essentially called for bringing parity between tax benefits available for education-related services, such as loans, and offering the same incentives to skill development training and courses as well. In a representation sent to the Finance Ministry on Friday, the NSDC has recommended changes to the Income Tax Act, and the Goods and Services Tax (GST).
“These interventions are needed because of India’s renewed push in newer sectors such as electronics manufacturing. Some states have the benefit of having semi-skilled workers, but many states don’t have that luxury. There is a need to bring skilling at par with education, because having the right skills can help in gaining meaningful employment,” a person aware of NSDC’s recommendations said, requesting anonymity.
“In recent years, the government has focused on education, providing various incentives and exemptions to educational institutions … However, in the current scenario, skilling is essential to make the youth employable upon completing their education,” they added.
Currently, the Income Tax Act allows an exemption from Income tax to not-for-profit universities and other educational institutions. The NSDC has told the Finance Ministry that skilling programmes and training are not specifically included in the definition of education, which “leads to ambiguity and becomes a litigative issue”. It has recommended that an explanation be added to clarify that “other educational institution” includes training institutes conducting skilling programmes and training.
The NSDC has also recommended that under Section 80(c) of the Act, individuals should be allowed to claim deduction in respect of fees paid to a skill training institute by the assessee, their spouse and any of two children.
Deductions which can be claimed for education loans for higher studies should also be applicable to loans taken for skill development, and vocational training institutes, the NSDC is learnt to have recommended.
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The NSDC has also sought several interventions in reduction and exemption for skilling institutions from certain indirect taxes. For instance, it has recommended that employment services under the ‘merit services’ category be levied a reduced GST rate of 5 per cent. “The current GST rate of 18 per cent, comparable to luxury goods, is a deterrent to the growth of the employment sector,” NSDC is learnt to have recommended to the Finance Ministry.
Established in 2008 as a not-for-profit public limited company, NSDC operates as a public private partnership (PPP) model under the Ministry of Skill Development & Entrepreneurship (MSDE).
The government owns 49 per cent of NSDC and the remaining 51 per cent is held by the private sector.
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