Budget 2026: Tax-exemptions for using CSR funds in skilling likely
26 Jan 2026

The Indian government is considering tax exemptions for companies investing their Corporate Social Responsibility (CSR) funds into vocational training.

The move is aimed at increasing private sector involvement in skill development, a key area for India's economic growth.

A formal proposal has been submitted to the Finance Ministry, with some benefits likely to be announced in the upcoming Union Budget on February 1.

Proposal aims to align CSR objectives with tax incentives
Strategic alignment

The proposal seeks to create a more integrated pathway for companies to invest in skill infrastructure.

It also aims at aligning CSR objectives and tax incentives, thereby boosting private sector participation.

Currently, corporate investments in skilling are regulated by several provisions under CSR and tax frameworks, each serving a different purpose.

The proposed alignment could simplify compliance and encourage long-term industry investment in training.

Only 3.5% of CSR spending has gone to skilling
CSR allocation

A recent report by CRISIL revealed that out of the ₹2.22 lakh crore spent by corporates on CSR since FY2015, only a meager 3.5% has been allocated to skilling.

The report also noted that the CSR initiatives have been fragmented and focused mainly on traditional or informal trades, which are not connected to the global employment ecosystem.

India has a huge opportunity in skill development
Global demand

The Ministry of Skill Development and Entrepreneurship believes India can meet the skill needs of developed economies in Europe, the Middle East, Japan, and Australia.

These countries are facing acute skill shortages in sectors such as healthcare, senior care, logistics, and construction.

However, this would require better policy alignment to encourage corporate sector participation in skilling on a larger scale.

PM Kaushal Vikas Yojana aims to train 15M youth
Skill training

The Pradhan Mantri Kaushal Vikas Yojana 4.0, which runs from 2022 to 2026, aims to provide skill training to some 15 million youth.

According to the Skill India dashboard, just 2.7 million candidates have been trained so far out of a total of 3.34 million registrations.

The Ministry of Corporate Affairs is also running the PM Internship Scheme, partly funded by the Centre and corporates through CSR funds.