Service Tax on Skill Development Companies Rolled Back 

In a big relief for youth pursuing vocational training courses to land  a job, Finance Minister P Chidambaram has rolled back the 12.36%  service tax on skill development and training firms imposed in the  Finance Bill of 2013-14.Experts had warned that the service tax  introduced this year on all training firms working in tandem with the  National Skills Development Corporation (NSDC) could jeopardise the  government's ambitious goal of training 500 million people by 2022 by  raising the effective fees payable by students.The NSDC,set up by the  finance ministry as a public private partnership,has been assigned the  task of fostering and funding private sector skill development  initiatives to 150 million people.Though the government had put  training firms in the negative list of activities attracting service  tax last year,this years Budget fine print explicitly omitted  NSDC-affiliated training providers,from that list making over 100 such  firms liable to pay service tax.The government has set a target of  skilling 9 million youth this year.The finance minister,who had  addressed the National Skills Development Corporation board in  June,personally ensured that a fresh notification was issued earlier  this month to correct the anomaly.As per the new notification,service  tax is not payable on any services provided by the National Skills  Development Corporation or any training institutes,assessment agencies  and sector skill councils approved by it.This has resolved the  uncertainty about service tax being levied on the course fees charged  by our training partners for skill development programmes and related  activities, Dilip Chenoy,chief executive officer and managing director  of NSDC,told ET.NSDC partners are relieved about the service tax  withdrawal,but believe that the government needs a fresh approach to  skill development in order to meet its lofty goals.Skilling cant be  considered a forprofit business as it doesnt have a business model,but it is a model business, said professor Mukti Mishra,chairman of Gram Tarang Employability Training Services,which has trained over 35,000 people in Naxalaffected areas and aims to scale up its capacity to 1 lakh trainees a year by 2022.The government must exempt training initiatives from all taxes,including income tax for five to ten years,offer incentives to create skill institutions and focus on their outcomes and impact, said Mishra,stressing that skill development is not just critical for school dropouts,but also for the formally educated who acquire no employable skills from their exambased degrees.

Economic Times, New Delhi, 26-09-2013