Budget 2012: Education sector hopes to capitalise income tax benefits

Budget 2012: Education sector hopes to capitalise income tax benefits

• Service tax rate raised from 10 per cent to 12 per cent.

• GST to become operational by August 2012.

• No change in corporate tax rates.

• Remove cascading effect of dividend distribution tax.

• For 2012-13, Rs 25555 crore provided for RTE-SSA representing an increase of 22 per cent.

• Rs 3,124 crore provided for Rashtriya Madhyamik Shiksha Abhiyan (RMSA) representing an increase of 29 per cent.

• Rs 1000 crore allocated for National Skill Development Fund in 2012-13.

• In order to incentivise companies to invest on skill development projects in the manufacturing sector, it is proposed to insert a new provision in the Income-tax Act to provide weighted deduction of 150 per cent of expenses (not being expenditure in the nature of cost of any land or building) incurred on skill development project.

Industry Expectation

• To grant infrastructure status to education sector

• Increase budget allocation to for Sarva Shiksha Abhiyan

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Increase in allocation skill development programmes. Also to give Tax benefit for companies setting up skill development centres in backward region.

Budget Impact

Thrust on education by increasing allocation goes well for education sector. Everonn Education will be benefit from allotment of fund to National Skill Development Fund and from new provision in the Income-tax Act to provide weighted deduction of 150 per cent of expenses incurred on skill development project. Last year Everonn has entered into a JV with the Union government's NSDC to train 1.5 crore people in various technical streams over the next 10 years.

Outlook

India is faced with a unique opportunity – highest increase in working age (15-64) population over the next 20-30 years which can propel economic growth. India will account for 25 per cent of the global increase in workforce over the next 4 decades.

The government is focused on improving the literacy rate and the quality of education in the country along with focus on skill development. Budget was positive for the sector.