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

Editorial Team

Updated :- December 29, 2023

BRIEF SUMMARY

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.

Income Tax Rates

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