Union Budget 2026: Education reforms include university townships, girls hostels, content labs

A new National Institute of Design will be set up in eastern India, alongside loan-linked support for veterinary colleges and labs.
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Five university townships in the vicinity of major industrial and logistic corridors, girls hostel in every district, setting up of content creator labs in 15,000 schools and 500 colleges and reduction of the tax collection at source (TCS) rate to 2 per cent for education are among the proposals announced in the Union Budget for the education sector.

The sector has got an allocation of over Rs 1.39 lakh crore, including Rs 55,727 crore for higher education.

University townships plan

Presenting the Union Budget for 2026-27 in the Lok Sabha, Union Finance Minister Nirmala Sitharaman announced that the government will support states in creating five university townships in the vicinity of major industrial and logistic corridors.

“These planned academic zones will host multiple universities, colleges and research institutions, skill centers and residential complexes,” she said in her budget speech.

Girls hostel initiative

Sitharaman announced the setting up of one girls’ hostel in every district of the country. There are over 700 districts in the country.

“In the Higher Education STEM institutions, prolonged hours of study and laboratory work pose some challenges for girl students. The Union Budget proposes to establish 1 girls’ hostel in every district through VGF or capital support,” she said.

She also proposed a loan-linked capital subsidy support scheme for veterinary colleges, hospitals, and diagnostics laboratories.

Content creator labs

The Budget also proposed to support the Indian Institute of Creative Technologies, Mumbai, for setting up content labs in 15,000 secondary schools.

Education minister hails budget

Union Education Minister Dharmendra Pradhan hailed the budget as “Viksit Bharat Budge”.

“It gives boost to education and employment-creation and presents a blueprint for the next phase of development. Bigger and bolder investments have been proposed to strengthen education and future-ready skills across the length and breadth of India,” he said.

National Institute of Design in East

The budget proposed the setting up of a new National Institute of Design (NID) in the eastern region of India.

TCS rate reduction

The Finance Minister also proposed to reduce TCS rate for pursuing education and for medical purposes under the Liberalised Remittance Scheme (LRS) from 5 per cent to 2 per cent.

The TCS rate on remittance under the LRS of an amount or aggregate of the amounts exceeding Rs 10 lakh has been proposed at 2 per cent for purposes of education or medical treatment from the current 5 per cent.

LRS limits explained

Under the LRS, all resident individuals, including minors, are allowed to freely remit up to USD 2,50,000 per financial year (April – March) for any permissible current or capital account transaction or a combination of both.

However, the TCS rate for purposes other than education or medical treatment will continue to attract a 20 per cent tax rate.

High-powered education committee

The Union Budget proposed to set up a High-Powered “Education to Employment and Enterprise” Standing Committee to recommend measures that focus on the services sector.

“This will make India a global leader in services, with a 10 pc global share by 2047. The Committee will prioritise areas to optimise the potential for growth, employment and exports. They will also assess the impact of emerging technologies, including AI, on jobs and skill requirements and propose measures thereof,” the Finance Minister said.

Published on February 1, 2026