Budget 2025: Ed-tech sector seeks tax relief, funds for AI-driven education

The ed-tech sector is hoping for more AI adoption through tax reductions, specifically targeting AI-first ed-tech businesses, startups, and MSMEs

With the 2025 Union Budget around the corner, the ed-tech sector is rallying for initiatives to address affordability, accessibility, and technological advancements.

 

While emphasising the need for government support in promoting artificial intelligence (AI) adoption and fostering collaborations with traditional institutions, industry leaders are also calling for Goods and Services Tax (GST) exemptions, interest-free loans for economically weaker students, and enhanced digital infrastructure in underserved areas.

 

India’s ed-tech market, valued at $7.5 billion in 2024, is projected to reach $29 billion by 2030, according to an IAMAI-Grant Thornton report.

 

GST exemptions

 

To make education affordable for economically weaker students, ed-tech players ask for reducing GST rates and interest-free loans. Prateek Maheshwari, co-founder of PhysicsWallah & chair of India Edtech Consortium (IEC), said, "Students that hail from Below Poverty Line (BPL) and Low Income Group (LIG) families should receive 100 per cent GST exemption from all educational expenses, be it test-prep courses or job-oriented skill courses; as it takes away a significant portion of their net disposable income." Currently, there is an 18 per cent tax slab on higher or online education.

 

He added that there should be rationalisation in interest rates of student loans and interest-free loans for economically disadvantaged students.

 

Echoing Maheshwari’s views, Mayank Kumar, co-founder of upGrad, said the government should provide tax incentives or reduce interest rates on education loans which would make global education more accessible and, in turn, benefit the ed-tech sector.

 

"We urge the government to remove GST slabs on learning items sold to schools, such as interactive panels, tablets, teaching software, and student apps. Lowering costs will ease the burden on parents and empower schools to adopt innovative teaching methods," said Sumeet Mehta, co-founder and chief executive officer (CEO) of school ed-tech unicorn LEAD Group, said.

 

Focus on AI in education

 

Startups in the ed-tech domain also want the government to prioritise AI adoption through increased funding. “The budget should focus on encouraging companies to invest in upskilling and reskilling their employees, particularly in areas like AI and emerging technologies,” Kumar said. He added that the government should increase the allocation for skill development programs and companies that invest in such programs, including AI training, should get tax breaks.

 

Jairaj Bhattacharya, co-founder and CEO of ConveGenius, said there should be financial support and tax reductions specifically targeting AI-first ed-tech businesses, startups, and micro, small & medium enterprises (MSMEs). “The government should create frameworks for realigning education programs to incorporate AI tools for improving learning outcomes and teacher training,” he said.

 

Digital education in underserved areas

 

Not just tax exemptions and skilling, ed-tech companies also hope for government initiatives/schemes to facilitate deeper penetration of digital/online education in tier-2 and tier-3 cities.

 

Pranav Kothari, CEO of Ei, said, "The government should ensure universal broadband access in schools by leveraging networks like BSNL, Airtel, or Jio as high-speed internet will enable the delivery of digital learning solutions to remote areas. Alongside connectivity, mandating third-party diagnostic assessments and using adaptive learning software can provide personalised support for students and teachers."

 

The government could incentivise local ed-tech companies to offer affordable and region-specific content that meets the needs of students in smaller cities, Praveen Singh, CEO, Aasoka (MBD Group) said. "We hope the upcoming budget will focus on allocating increased funds to enhance digital infrastructure, ensuring that online learning platforms are accessible to all students, particularly in underserved areas," he added.

 

Tie-ups for startups, traditional institutions

 

For a collaborative and integrated education system, ed-tech startups expect policies and incentives that enhance their collaboration with conventional education institutions.

 

Naveen Goyal, CEO and founder, Meritto (formerly NoPaperForms), said, "The budget can facilitate this collaboration by offering grants or subsidies for educational institutions that integrate innovative ed-tech solutions into their curriculum. The government can also create a framework that supports the co-creation of educational content, combining the strengths of ed-tech companies in technology and the expertise of traditional institutions in pedagogy."