New Tax Benefits for Skill Development Proposed in Budget
NEW DELHI: The National Skill Development Corporation (NSDC) has put forward several tax benefits aimed at promoting skill development in alignment with formal education. These proposals were presented to the Finance Ministry as part of the Budget discussions.
Among the key proposals are deductions on tuition fees and interest on loans for skill training, tax exemptions for scholarships, and lower tax rates for for-profit skilling institutions. Additionally, the NSDC seeks to extend the benefits available to educational institutions to those offering skill development programs, ensuring these training institutes receive enhanced deductions for their expenditures. Furthermore, adjustments to the Goods and Services Tax (GST) regime have also been suggested.
An amendment to the direct tax laws was proposed to clearly define ‘education’ to include skill development programs and training conducted by institutes. This change will allow these institutes to qualify for exemptions applicable to trusts. “This will enable institutions to function at a lower cost, making the programs more affordable and of better quality, as well as enhancing access,” stated an NSDC official.
The proposal also includes allowing individuals to claim deductions for donations made to training institutes that offer skilling courses. Both the skilling body and the skill development ministry believe that such incentives will significantly boost India’s skill development sector, much like how various benefits have previously improved the country’s literacy ratio.
“These changes aim to align skilling with formal education, providing extensive tax benefits and incentives to skilling institutions, thereby making skilling more accessible and affordable,” a senior official told TOI.
Mirroring the provisions for not-for-profit universities and other educational institutions, the NSDC also proposed exemptions from Income Tax for skilling institutions. To encourage the growth and expansion of new skilling training centers, lower tax rates were recommended for these new establishments.
Additional recommendations include extending deductions on tuition fees for skill training institutes, easing financial burdens by making interest on loans for vocational and skill development training eligible for tax deductions, and seeking tax exemptions for scholarships for skill development courses. By facilitating higher participation in skilling programs, these measures are expected to propel India’s workforce development.
