New Delhi, July 15, 2024.
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.
