Tax benefit for skill development available only on new recruits

Written by fe Bureau | New Delhi | Updated: Jul 19 2013, 23:15pm hrs
The benefit of deducting one and a half times the spending on skill development of employees when businesses calculate their taxable income will be available only if spent on new recruits, the finance ministry said on Thursday.

According to the rules the revenue department notified on July 15 for granting the benefit of weighted deduction of 150% of the spending on skill development projects to companies, spending on existing employees will not be eligible if their training starts after six months of recruitment.

The finance ministry had announced the benefit in the 2012 Union Budget by introducing section 35CCD in the Income Tax Act, 1961.

The rules also say the benefit will not be given to alcohol, spirit and tobacco producers. Skill development should be conducted in separate facilities in a training institute set up by the central or state government or a local authority.

The National Skill Development Agency will be the nodal agency to scrutinise the applications made by companies. Weighted deduction of expenditure will not cover the cost of land or buildings.