Section 47(1)(b) of the Income Tax Act, 2025 provides a deduction for expenditure incurred on skill development projects by companies engaged in specified services. Understanding which services qualify is essential for companies seeking to claim this deduction.
The 31 Eligible Service Categories
The following services qualify for the skill development project deduction under Section 47(1)(b):
1. Accounting Services
This includes all accounting and bookkeeping services, financial reporting, auditing, and related services.
2. Architect Services
This includes architectural design, planning, and related services for construction and development projects.
3. Automobile Repair or Maintenance
This includes repair, maintenance, and servicing of automobiles, including two-wheelers, four-wheelers, and commercial vehicles.
4. Banking, Insurance and Financial Services
This includes ATM installation, maintenance and operations, banking correspondents, insurance agents, and other financial services.
5. Beauty and Cosmetology
This includes hair styling, manicurists, pedicurists, and other beauty and cosmetology services.
6. Cable Operators or Direct To Home (DTH) Services
This includes cable television operations, DTH services, and related installation and maintenance.
7. Cargo Handling and Stevedoring Services
This includes cargo handling at ports, airports, and other transportation hubs, as well as stevedoring services.
8. Construction Services
This includes painting, woodwork, plumbing, flooring, electrical wiring, installation or maintenance of lifts, and other construction-related services.
9. Courier Services
This includes courier and delivery services, including parcel and document delivery.
10. Design Services
This includes fashion design, gems and jewellery design, apparel design, industrial designing, and other design services.
11. Event Management
This includes planning, organizing, and managing events, including corporate events, weddings, and other functions.
12. Facilities Management, Housekeeping, Cleaning Services
This includes facilities management, housekeeping, cleaning services for residential, commercial, and industrial properties.
13. Fire and Safety Services
This includes fire safety services, installation and maintenance of fire safety equipment, and related training.
14. Food Processing or Preservation Services
This includes post-harvesting and post-farm-gate skills, food processing, preservation, and packaging.
15. Health and Wellness Services
This includes spa services, nutritionists, weight management, health instructors, yoga, gym trainers, and other wellness services.
16. Home Decor Services, Landscaping
This includes home decor, interior design, landscaping, and related services.
17. Hospital and Healthcare Services
This includes lab technicians, nursing, paramedical staff, and other healthcare services.
18. Hospitality Services
This includes culinary skills, catering services, hotel management, and other hospitality services.
19. Logistics and Transportation Services
This includes transportation by any mode including air, sea, road, rail, or pipelines, driving, operation of heavy machinery equipment, forwarding agents, packers and movers.
20. Market Research Services
This includes market research, data collection, analysis, and related services.
21. Media, Film, or Advertising
This includes media production, film production, advertising, and related creative services.
22. Mining and Extraction of Mineral Resources
This includes mining, extraction of mineral resources, including hydrocarbons, and related services.
23. Packaging and Warehousing Services
This includes both ambient temperature storage and cold storage, operation of internal container depots and container freight stations.
24. Port and Maritime Services
This includes dredging, piloting, tug boat operations, ship building, ship scrapping, bunkering, and other maritime services.
25. Power Sector Services
This includes services required for erection, installation, or maintenance of equipment or towers in generation, transmission, or distribution sector projects.
26. Private Security Services
This includes guards, supervisors, installation and maintenance of security equipment, and other private security services.
27. Refrigeration and Air-Conditioning
This includes installation, maintenance, and repair of refrigeration and air-conditioning systems.
28. Repair and Maintenance Services
This includes installation and servicing of household goods, white goods, and other repair and maintenance services.
29. Retail Marketing Services
This includes shop floor assistants, merchandisers, and other retail marketing services.
30. Telecom Services
This includes erection and maintenance of towers, installation of telecom equipment, and other telecom services.
31. Travel and Tourism Services
This includes guides, ticketing, sales, cab drives, and other travel and tourism services.
Key Requirements
Training Institute
The skill development project must be undertaken in a separate facility in a training institute. The training institute must be:
- Set up by the Central Government or a State Government or a local authority
- Affiliated to a State Council for Vocational Training
- Affiliated to, or approved by, or empanelled by, the National Council for Vocational Education and Training
- Affiliated to, or approved by, or empanelled by, the Central Government and certified by the National Council for Vocational Education and Training
- Affiliated to, or approved by or empanelled by, the State Government and certified by the National Council for Vocational Education and Training or a State Council for Vocational Training
Separate Facility
The project must be undertaken in a separate facility in the training institute. This ensures that the skill development project is distinct from other activities of the company.
Expert Legal Guidance
Understanding which services qualify for the skill development deduction is essential for companies planning to undertake such projects. Anuj Desai & Associates provides expert advisory services on Direct Tax Code compliance, helping companies identify eligible service categories and navigate the approval process.