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Easier access to loans, skill development to boost education

March 01, 2015 16:13 IST
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Students will now have easy accessibility to loans for higher studies.

Budget Provisions  

For companies, for financial year 2015-2016, additional surcharge called the “Education Cess on income-tax” and “Secondary and Higher Education Cess on income-tax” shall continue to be levied at the rate of 2% and 1%, respectively, on the amount of tax computed, inclusive of surcharge (wherever applicable), in all cases. Budget 2015: Complete Coverage

No marginal relief shall be available in respect of such Cess.

Finance Minister has allocated Rs 68968 crore to the education sector including mid-day meals

Finance Minister emphasized on formal skill training and will soon launch a National Skills Mission which will consolidate skill initiatives spread across several Ministries.

A Rs 1500 crore has been set apart for Deen Dayal Upadhyay Gramin Kaushal Yojana.  

A student Financial Aid Authority to administer and monitor the front-end all scholarship as well Educational Loan Schemes, through the Pradhan Mantri Vidya Lakshmi Karyakram 

An IIT to be set up in Karnataka and Indian School of Mines, Dhanbad to be upgraded in to a full-fledged IIT.  

New All India Institute of Medical Science (AIIMS) to be set up in J&K, Punjab, Tamil Nadu, Himachal Pradesh and Assam. Another AIIMS like institutions to be set up in Bihar.  

A post graduate institute of Horticulture Research & Education is to be set up in Amritsar.  Budget 2015: Complete Coverage

3 new National Institute of Pharmaceuticals Education and Research in Maharashtra, Rajasthan & Chattisgarh and one institute of Science and Education Research is to be  set up in Nagaland & Orissa each.  

The government has addressed the need to upgrade over 80000 secondary schools and add or upgrade 75,000 junior/middle, to the senior secondary level.  

The emphasis on the national skills mission, the launch of welfare scheme 'Nayi Manzil' and easier loans for higher education.  

GST implementation from April 2016.  

Reduce corporate tax from 30% to 25% over the next four years, starting from next financial year.  

General Anti Avoidance Rule (GAAR) to be deferred by two years.  

Service Tax rate increased from 12.36% (inclusive of cesses) to 14%. The Education Cess and Secondary and Higher Education Cess shall be subsumed in the revised rate of Service Tax.  

100% deduction for contributions, other than by way of CSR contribution, to Swachh Bharat Kosh and Clean Ganga Fund.  

Enabling provision to levy Swachh Bharat cess at a rate of 2% or less on all or certain services, if need arises.  

Industry Expectations  

To address the shortage of faculty in the country, the Government should expedite the launch of National Mission for Faculty Development and provide a tax relief to the tune of 50% to Universities / Higher Educational Institutions that spend on the capacity development and training of their staff.  

Given the priority of Skill Development in the national agenda, Government should make the following provision - Any person enrolling for a Skills Certification course be eligible for a 20% tax rebate (only applicable for the tuition fee amount); Any Educational Service Provider opening a Skills Centre in a backward area should be given an exemption from income tax for the first 3 years.  

All donations (and not just restricted only to research funding) to qualified Higher Educational Institutions should be eligible for 200% tax deduction.  

New or existing educational institutions making a fresh investment of Rs 75 crore or above should be eligible for a preferred and long term Loan facility with interest rates at par with Base Rates or Prime Lending Rates of the commercial banks or financial institutions and for a tenor of up to 15 years with step up repayment plan.  

Higher Educational Institutions should be free to set up campuses overseas freely and a line of credit of at least $500m should be set up by the Exim Bank, as a part of India's diplomatic efforts and use of soft power.  

Tax break to corporates which nominate their employees for higher education either through the continuing education model or a full time program.

The fees paid by corporate for employees' education should qualify for investment in human resources and hence exempted for tax purposes.  

As colleges fees have increased tremendously income taxpayers should be allowed a deduction against gross total income up to a minimum of Rs 100000 per child for fees paid to a higher educational institution recognized by Government. This will mitigate the cost of Higher education.  

Service Tax Exemption for Specified Auxiliary Educational Services  

Budget Impact  

The emphasis on the national skills mission, the launch of welfare scheme 'Nayi Manzil' and easier loans for higher education are all steps in the right direction and hold promise for the immediate and long term.  Less than 5% of our potential work force gets formal skill training to be employable.

A national skill mission to consolidate skill initiatives spread across several ministries to be launched will help various companies in education sector who have launch skill development institutes.

Thrust on education by increasing allocation goes well for education sector and Education companies like Educomp, Everonn, NIIT.

One of the good news for the industry is cut in corporate tax rate by 5% to 25%. This will help companies in rise in net profit and EPS. Demand from education sector to exempt schools from service tax on outsourced services has not been met.

Stock to watch

Everonn Education, NIIT and Educomp Solution


Education remains one of the key focus of the new government. 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% 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.





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