The Centre’s much-touted Skill India mission has run into a self-made wall as experts say the 18 percent Goods & Service Tax (GST) imposed on enrolment into the programme has discouraged workers and employers alike, reports Business Standard.
GST is applied on independent candidates and sponsored workers, while the Finance Ministry usually sponsors training fees, it said.
Moneycontrol could not independently verify the report.
Most vocational or professional training programmes are already expensive. For example, a basic steel welding courses cost about Rs 45,000 per student; while a textile, diamond processing or plumbing course charges between Rs 20,000 and Rs 25,000.
Since most students are from poor backgrounds an additional 18 percent
GST escalates the cost burden. “Students paying for themselves or sponsors find the 18 percent GST back-breaking leading to postponement or cancellation of vocational training, which imparts basics to under-qualified and unskilled youth to make them employable,” GA Soman, Principal of Don Bosco Training Academy in Mumbai and former Chairman of Indian Institute of Welding (IIW) told the paper.
Experts also pointed out how the economic slowdown, evolving job market requirements and opportunities in the unorganised sector have increased the need for skill development, which the government’s GST imposition has overlooked, the report said.
The IIW has demanded a GST exemption on skill development courses. Expenses incurred by diamond processors are subject for reimbursement under the National Skill Development Council (NSDC), which offers complete waiver of GST in vocational courses.
The Jewellery Export Promotion Council (GJEPC) has asked for a five percent reduction on diamond certification. The council said the GST burden borne for certification is not made up from input credits on exports, thus blocking the working capital of diamond processors.
“The industry pays 18 percent GST on all processed diamond certified by a certifying agency. When these certified diamonds are exported, the exporter gets an input credit, which stands lower than the GST paid on certification as buyers do not reimburse taxes,” the article quotes GJEPC Vice Chairman Colin Shah as saying
The ongoing economic slowdown has impacted the number of trainees enrolling, but Rahul Mehta, President of Clothing Manufacturers Association of India (CMAI), feels this is a temporary phenomenon which would be overcome in six months.
Source: moneycontrol.com