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What is Health and Education Cess on Income Tax? Rate, Calculation

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.

BRIEF SUMMARY
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

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.

Conclusion

Income Tax Rates

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