Edtech startups are seeking a lower tax slab on educational products and services in the upcoming Union budget 2023. Edtech founders believe the high tax slab they currently fall under is acting as a barrier to democratising education at a time the government is pushing for it.

“The government says that education is not for profit and we want to democratise education. The NEP (new education policy) says that we want to bring multimodal learning. But when you look at the GST (goods and services tax) we pay, the tax regime hasn’t kept pace,” said Sumeet Mehta, co-founder and chief executive officer (CEO) of WestBridge-backed school edtech unicorn LEAD.

“Most educational services are charged at 18 percent. Others like learning hardware for schools are taxed even higher at 28 percent. But the schools can’t charge parents, hence we can’t charge schools. So, there is somewhere a mismatch between the education policy of the country and the GST regime for edtech,” Mehta told Moneycontrol.

In Budget 2022, Finance Minister Nirmala Sitharaman highlighted the government’s focus on digital learning with its decision to expand the ‘One class, one TV channel’ programme and set up a digital university, among other efforts.

The NEP introduced by the government pre-pandemic also pushes tech integration in school education while underlining the need for pedagogy to become multimodal.

“If we want holistic, multimodal education, then we have to look at all components and remove the tax burden so that we can truly make education affordable,” added LEAD’s Mehta.

IEC weighs in

The newly formed self-governing industry body, the Indian Edtech Consortium (IEC), weighed in on the demand and said the government should consider shifting educational products and services to a tax slab of 5-12 percent.

“We also strongly recommend income tax benefits per annum for parents of up to Rs 15,000 for those spending on educational products and services,” said Mayank Kumar, chair of IEC.

Source: Money Control 
https://www.moneycontrol.com/news/business/startup/budget-2023-edtechs-seek-lower-gst-slab-on-educational-products-and-services-tax-deductions-on-upskilling-courses-among-others-9695291.html