A high goods and services tax (GST) on skill development and training could hurt the $180 billion information technology (IT) sector, a top official of National Association of Software and Services Companies (Nasscom) told TechCircle.
Currently, IT training or the non-academic commercial training is taxed at 18%. Nasscom is urging for a zero rate as reskilling and upskilling have become crucial for the country's IT sector to stay relevant in the rapidly evolving tech landscape.
"The industry faces shortages in terms of employable workforce. While education is seen as a fundamental right and such institutions don't need to pay GST at all, the industry has to devote considerable, time, effort and money to make these recruits work effectively," Ashish Aggarwal, senior director and head, public policy, Nasscom, told TechCircle.
The need to constantly invest in upskilling is not necessarily because of inadequacy in the education system, but because of the emerging technologies’ role in digital transformation, Nasscom told the GST Council.
"The training is a cost centre or investment for the sector. So we have requested to make it on a par with academic institutions and make it zero. At least we can make the training qualify for input credit," Aggarwal said.
When the companies employ external consultants, training institutions or pay for training modules, they have to pay the high GST rate. Many of the re-skillings and upskillings are often done using platforms such as Udacity, Coursera, Pluralsight and Simplilearn, where these rates apply.
"The education sector has been commercialised is a fact recognised by the government. Moreover, the distinction between core and ancillary education is blurring. GST needs to balance this and there is also a provision in GST for approved professional and vocational training courses," Aggarwal said.
According to Nasscom, till 2021, the number of open positions for data scientist roles is expected to increase at a compound annual growth of 64%. The talent demand-supply gap in artificial intelligence (AI) and big data/analytics is expected to grow from 62,000 to over 140,000 over the next three years.