Lok Sabha Question No. 2117 (UNSTARRED), answered on 2024-08-05
Subject: Tax Benefits for Skill Training Institutions
Ministry: FINANCE
Asked by: Shri Manish Tewari

## Government of India Ministry of Finance Department of Revenue

## LOK SABHA UNSTARRED QUESTION NO. 2117

TO BE ANSWERED ON MONDAY, AUGUST 5, 2024 SHRAVANA 14, 1946 (SAKA)

## TAX BENEFITS FOR SKILL TRAINING INSTITUTIONS

## 2117 SHRI MANISH TEWARI:

Will the Minister of FINANCE be pleased to state:

- (a) whether  the  Government  has  any  plans  to  extend  the  tax  benefits  available  for  education  related services to include skill development training institutions, if so, the details thereof;
- (b) whether  the  Government  proposes  to  amend  the  Income  Tax  Act  to  include  skill  development training institutes within the definition of other educational institutions;
- (c)  if so, the details thereof, if not, the reasons therefor;
- (d)  whether the Government has any plans to provide the same tax exemptions for loans taken for skill development and vocational trainings as are available for education loans for  higher studies; and
- (e)  if so, the details thereof, if not, the reasons therefor?

## MINISTER OF STATE IN THE MINISTRY OF FINANCE

## ANSWER (SHRI PANKAJ CHAUDHARY)

(a) to (c):  (I) GST rates and exemptions are prescribed on the recommendations of the GST Council, which  is  a  constitutional  body  comprising  of  representatives  from  both  the  Centre  and  the States/UTs. Based  on  the  recommendations  made  by  the  GST  Council,  the  following  services  in relation to skill development training institutions  are already exempt:

- A. Any services provided by,
2. (a) the National Skill Development Corporation set up by the Government of India;
3. (b) a Sector Skill Council approved by the National Skill Development Corporation;
4. (c)  an  assessment  agency  approved  by  the  Sector  Skill  Council  or  the  National  Skill  Development Corporation;
5. (d)  a  training  partner  approved  by  the  National  Skill  Development  Corporation  or  the  Sector  Skill Council,

in relation to-

- (i)  the  National  Skill  Development  Programme  implemented  by  the  National  Skill  Development Corporation; or
- (ii) a vocational skill development course under the National Skill Certification and Monetary Reward Scheme; or
- (iii) any other Scheme implemented by the National Skill Development Corporation.

B. Services of assessing bodies empanelled centrally by the Directorate General of Training, Ministry of  Skill  Development  and  Entrepreneurship  by  way  of  assessments  under  the  Skill  Development Initiative Scheme.

- C.  Services  provided  by  training  providers  (Project  implementation  agencies)  under  Deen  Dayal Upadhyaya  Grameen  Kaushalya  Yojana  implemented  by  the  Ministry  of  Rural  Development, Government of India by way of offering skill or vocational training courses certified by the National Council for Vocational Training.

D. Services provided to the Central Government, State Government, Union territory administration under any training programme for which 75% or more of the total expenditure is borne by the Central Government, State Government, Union territory administration.

(II) Further, an institution providing services by way of education as a part of an approved vocational education course is considered to be an 'educational institution' for the purpose of GST exemptions. Services provided by an educational institution to its students, faculty and staff are exempt from GST. In  addition,  services  provided  by  an  educational  institution  by  way  of  conduct  of  entrance examination against consideration in the form of entrance fee is also exempt.

For the purpose of the exemption, 'approved vocational education course' means, -

- (i)  a  course  run  by  an  industrial  training  institute  or  an  industrial  training  centre  affiliated  to  the National Council for Vocational Training or State Council for Vocational Training offering courses in designated trades notified under the Apprentices Act, 1961 (52 of 1961); or
- (ii)  a  Modular Employable Skill Course, approved by the National Council of Vocational Training, run by a person registered with the Directorate General of Training, Ministry of Skill Development and Entrepreneurship
- (III) Education and advancement of object of general public utility (subject to satisfaction of certain conditions) are included in definition  of 'charitable purpose' under the Income-tax Act, 1961 ('the Act').  Income  from  property  held  under  trust  or  institution  and  applied  for  charitable  or  religious purposes is exempt subject to the provisions of sections 11 to 13 of the Act.
- (IV) Further, income of universities, educational institutions or funds or institutions established for charitable purposes are exempt under various sub-clauses of clause (23C) of section 10 of the Act, if they  satisfy  conditions  laid  down  under  the  respective  provisions.  Finance  (No.  2)  Bill,  2024  has proposed that approvals to trusts or funds or institutions shall no longer be granted under sub-clauses (iv),  (v),  (vi)  &  (via)  of  clause  (23C)  of  section  10  with  effect  from  1.10.2024.  However,  existing approved  trusts,  funds  or  institutions  shall  continue  to  get  the  benefit  of  exemption,  as  per  the provisions of sub-clauses (iv), (v), (vi) or (via) of clause (23 C) of section 10, till the validity of the said  approval.  Such  institutions  can  thereafter  apply  under  section  12A  for  registration  and  the provisions  of  section  11  to  13  (containing  conditions  similar  to  section  10(23  C))  shall  apply accordingly.

(d)  &  (e):  Deduction  in  respect  of  interest  on  loan  taken  for  higher  education  is  provided  under Section 80E of the Income Tax Act. There is no further proposal to amend provisions of the Income Tax Act, at present.

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