What is Health and Education Cess on Income Tax ? Rate, Calculation
Author: Editorial Team | in, Updated on: February 01, 2025
Overview : The Health and Education Cess is an extra tax imposed by the Indian government on top of the income tax. This tax is intended to raise funds for educational initiatives and development programs. Education is the cornerstone of national progress, and the government plays a vital role in promoting its growth.
The Health and Education Cess has undergone changes in the last five financial years. For the assessment year 2024-25 (FY 2023-24), the education cess is still at 4%, and it applies to the income tax due under the old and new tax regimes. To understand the importance of the education cess and how it contributes to the growth of education in India, let’s explore this topic in more detail. Knowledge of education is necessary for the correct filing of income tax returns.
Health & Education Cess in FY 2023-24
- Rate : 4% of income tax and surcharge, applicable under old and new tax regimes.
- Calculation : Levied after determining the income tax.
- Impact : Generates significant revenue for the government to invest in educational initiatives like the Sarva Shiksha Abhiyan and Mid-Day Meal Scheme.
- It applies to both individual and corporate taxpayers.
Evolution of Health & Education Cess Rates (FY 2019-24)
| Financial Year | Total Education Cess Rate | Notes |
|---|---|---|
| 2019-20 | 4% | Introduced as Health & Education Cess |
| 2020-21 | 4% | No change |
| 2021-22 | 4% | No change |
| 2022-23 | 4% | No change |
| 2023-24 | 4% | No change |
Conclusion
Although the health and education cess burdens taxpayers, it undeniably plays a vital role in strengthening India's education system. Understanding its history, purpose, and impact enables us to actively participate in shaping the future of education in our country.
Author Bio
Editorial Team | in
Setindiabiz Editorial Team is a multidisciplinary collective of Chartered Accountants, Company Secretaries, and Advocates offering authoritative insights on India’s regulatory and business landscape. With decades of experience in compliance, taxation, and advisory, they empower entrepreneurs and enterprises to make informed decisions.