Tax benefits like those under Section 80C Can Encourage Upskilling: upGrad’s Co-Founder Mayank Kumar 

India is home to the world's largest youth population with over 65% falling under the working-age group, offering us a unique opportunity to lead with talent equipped for any job, skill, or challenge. Our nation’s progress in the last few years reflects GOI’s ambition to build an economic superpower. However, to move forward, we must prioritise education and skill development, helping India transform from an outsourcing economy to a globally recognised knowledge economy and innovation hub further exemplified by initiatives like INDIAai. 

While India does boast a powerful digital landscape, laying a solid foundation with initiatives like Aadhaar, UPI, and APAAR, it is now time we leverage this infrastructure and accelerate our journey to becoming a knowledge nation.  

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Make Skilling a Culture vs. One-Time Event  

Nearly 35 million Indians choose to pursue education and employment opportunities abroad each year. In 2023-24, India topped the list for foreign remittances with Indians residing overseas sending $125Bn in remittances to their families in India, crossing the $100 billion mark for the second consecutive fiscal. Moreover, there are 20+ Indian-origin CEOs heading global billion-dollar companies. These numbers highlight the immense talent from India making their mark across the world and are a compelling base on which India must build a global leadership position.  

To fully capitalise on this potential, a paradigm shift is needed in how we perceive continuous learning and upskilling. It must be viewed as a long term investment in life rather than a one-time event. Continuous learning has not yet penetrated effectively across various government strata. Last year, NASSCOM flagged the employability gap in engineering graduates, highlighting the lack of strong foundational and professional skills. 3 To bridge the gap between education and employability, the budget should focus on boosting skill development initiatives.  

Boosting Individual Skilling through Tax Reforms 

Extending Exemptions for Skilling Services: To make skilling services more affordable, the government should consider extending the exemption to services provided by skilling institutions to students, faculty, and staff. This would cover the outward supply of services provided by these 3  institutions, making skilling programs more accessible and expanding the outreach of skill development initiatives. By reducing the cost burden on these essential services, we can encourage more individuals to participate in continuous learning and upskilling programs, thereby building a more competent and capable workforce.  

This step would also align with the broader goal of making education and skill development more inclusive and widespread. 

Encouraging Tax Reforms: Appropriate tax reforms should be implemented to foster skill development. Extending tax benefits to loans taken for vocational training and skill development programs would reduce financial burdens, promoting upskilling and reskilling, and creating a more employable workforce. Such reforms would not only alleviate financial stress for learners but also incentivise them to invest in their future. By making vocational training and skill development more financially accessible, we can ensure a steady supply of skilled professionals ready to meet the demands of various industries, thus strengthening the overall economy.  

Reducing GST on Educational Services: The high tax burden has been a significant deterrent to skilling and upskilling. Lowering the GST on educational services and online courses provided by private entities would make these programs more affordable and accessible. Additionally, offering subsidies for students to acquire digital educational devices would further support this initiative.  

Tax Benefits for Lifelong/Continuous Learning: To encourage upskilling and make it a household culture, tax benefits similar to those under Section 80C (like for Mutual Funds or Life Insurance) could be considered. This would incentivise individuals to invest in acquiring job skills, ultimately bridging the talent gap in the long run.  

Corporate Skilling Initiatives  

Deduction for Training New Employees: Widening the scope of Section 35CCD through deduction of expenses w.r.t. skilling, upskilling and reskilling of not only newly recruited employees, but also for existing employees will encourage upskilling and reskilling. The benefit of deduction can also be claimed by all kinds of entities (not just companies) which will help businesses adapt to new-age techniques and technology. 

Incentivising Skill Development Expenses: Reintroducing enhanced deductions for expenses incurred on skill development projects will encourage a focus on skilling and upskilling, reducing the current market gap between skill expectations and reality. 

Education Loans and Grants  

Tax Relief for Individual Assessees: Encouraging individual assessees to upskill/reskill by providing tax relief in the form of deductions for interest on loans taken for vocational training and skill development programs would reduce financial burdens and ensure higher participation, creating a more employable workforce.  

Exemptions for Scholarships: Specifically covering scholarships granted to meet the cost of skill development/vocational training under the ambit of ‘scholarships granted to meet the cost of education’ would expressly encourage excellent performance and achievements by students, contributing to the creation of expertise and a qualified workforce. The upcoming Union Budget 2024 presents an opportunity to demonstrate India’s commitment to education and skill development. By prioritising learning & skilling, we can fulfill the aspirations of India's youth, support innovation, and build a more prosperous, knowledge-driven future.