How Private Schools Should Fix Fees for a New Campus
Fee setting in India is not a national decision, it is a state decision. A new campus has to be priced to its own state's law and formula from day one, because most states then lock that fee for a three year block. This is the July 2026 map, verified against the governing Acts, notifications and court orders.
Why there is no single national fee rule
Education sits on the Concurrent List of the Constitution (Entry 25, moved there by the 42nd Amendment in 1976), so both the Union and the states can legislate on it. In practice, the power to regulate school fees rests almost entirely with the states. Not every state has passed a dedicated fee law. Where one does not exist, a school falls back on the Right to Education (RTE) Act, 2009, and the affiliation bye-laws of its board.
Non-profit only
A private school must be run by a non-profit entity: a public charitable trust, a registered society, or a Section 8 company, not a for-profit business. The Supreme Court, in T.M.A. Pai Foundation (2002), allows a reasonable surplus for growth but bars profiteering and the commercialisation of education.
The RTE floor, everywhere
The Right to Education (RTE) Act, 2009 (Section 13) bars any capitation fee or donation at admission, with a penalty of up to ten times the amount charged. This applies whether or not a state has its own fee law.
CBSE schools
Central Board of Secondary Education (CBSE) affiliation bye-laws require fees to be approved by the School Management Committee (SMC), with no profit motive and no capitation, and to stay within the rules of the appropriate Government. Government rules prevail over the SMC.
ICSE and CISCE schools
Council for the Indian School Certificate Examinations (CISCE) rules require the managing committee to set fees that are commensurate with the facilities provided, again with no capitation.
So for a promoter, the real question is not what the market will bear. It is what the specific state allows, and on what evidence. The map below answers that.
The fee-regulation map for a new campus
The states below have enacted specific fee legislation, verified against the governing Acts, notifications and court orders as of July 2026. States not listed here largely rely on the RTE floor and the board bye-laws described above.
| State | Legislation and authority | What you can charge and raise | How often you can raise fees | Enforcement |
|---|---|---|---|---|
| Andhra Pradesh | Government Order under the Andhra Pradesh Educational Institutions (Regulation of Admission and Prohibition of Capitation Fee) Act, 1983.Authority: District Fee Regulatory Committee (DFRC) | The DFRC-approved fee holds for a three year block, with a yearly rise linked to the Consumer Price Index (CPI). Schools charging tuition of INR 12,000 a year or less are exempt from DFRC determination. | AnnuallyCPI-linked, within a 3-year block | Charging above the approved fee is treated as a capitation fee and risks withdrawal of the No Objection Certificate (NOC) and recognition. Confirm the current block's notification before pricing. |
| Delhi In force AY 2026-27 | Delhi School Education (Transparency in Fixation and Regulation of Fees) Act, 2025.Authority: School-Level Fee Regulation Committee (SLFRC) | No flat percentage cap. Fees are fixed for a three year block by the SLFRC, which includes five parents drawn from the Parent-Teacher Association (PTA) and needs broad consensus, giving parents an effective veto. Development fee cannot exceed 10 percent of annual tuition. | Every 3 yearsblock; no fixed % cap | First violation INR 1 lakh to INR 5 lakh; a repeat violation INR 2 lakh to INR 10 lakh, plus refund of the excess collected. |
| Gujarat | Gujarat Self Financed Schools (Regulation of Fees) Act, 2017.Authority: zonal Fee Regulatory Committee (FRC) | Notified exemption limits (a school below the limit needs no FRC approval): INR 15,000 for pre-primary and primary, INR 25,000 for secondary and higher secondary general, INR 30,000 for higher secondary science. To charge above a limit, a school must justify it to the FRC on costed grounds. | Every 3 yearsflat within the block | Refunds and penalties for breach; persistent non-compliance risks derecognition. |
| Haryana | Haryana School Education (Amendment) Rules, 2021 (Form VI).Authority: State Education Department | The annual fee increase is capped at the latest Consumer Price Index (CPI) rise plus 5 percent. | AnnuallyCPI + 5% | Penalties up to INR 2 lakh, tiered by stage of schooling, and withdrawal of recognition. |
| Karnataka Contested | No dedicated fee-cap statute; framework rests on the Karnataka Education Act, 1983.Authority: Department of Public Instruction | No statutory percentage cap on private unaided school fees. The state's power to prescribe fees is itself under challenge: Section 48 of the Act was struck down as beyond the state's power, and the matter is under appeal. | No statutory capregime contested | Oversight under the Education Act, with a firmer framework under debate. Price to a defensible cost base rather than to an assumed cap. |
| Maharashtra | Maharashtra Educational Institutions (Regulation of Fee) Act, 2011.Authority: Executive Committee of the PTA, and the Divisional Fee Regulatory Committee (DFRC) | A school may propose an increase of up to 15 percent, taking effect after two years, subject to approval by the Executive Committee of the Parent-Teacher Association (PTA). | Every 2 yearsup to 15% | If the PTA committee rejects the proposal, it escalates to the Divisional Fee Regulatory Committee (DFRC) for a binding decision. |
| Punjab Proposed | In force: Punjab Regulation of Fee of Un-aided Educational Institutions Act, 2016. Proposed: an Amendment Ordinance, 2026 (Cabinet approved June 2026, awaiting the Governor's assent as of July 2026).Authority: State Education Department | Under the proposed ordinance, annual hikes would be capped at 5 percent, with anything higher needing committee approval. Schools that raised fees by more than 5 percent a year over the previous three years would refund the excess. | Annually8% now; 5% proposed | Proposed only, not yet in force. Treat as a signal of direction, not a current rule. |
| Rajasthan | Rajasthan Schools (Regulation of Fee) Act, 2016.Authority: School Level Fee Committee (SLFC) | The SLFC, which includes five parents, fixes the fee for a three year block, expressly weighing the qualifications, salaries and increments of the teaching staff. | Every 3 yearsflat within the block | Binding for the three year block; disputes escalate to the Divisional Fee Regulatory Committee (DFRC). |
| Tamil Nadu | Tamil Nadu Schools (Regulation of Collection of Fee) Act, 2009.Authority: Private Schools Fee Determination Committee, headed by a retired High Court judge | The Committee fixes fees for three year blocks based on location, infrastructure and administrative cost. | Every 3 yearsflat within the block | A Madras High Court order of July 2026 requires private schools to display their approved fee structure on notice boards and at the school entrance. |
| Uttar Pradesh | Uttar Pradesh Self-Financed Independent Schools (Fee Regulation) Act, 2018.Authority: District Fee Regulatory Committee (DFRC) | The annual increase is capped at the lower of the Consumer Price Index (CPI) rise plus 5 percent, or the average rise in teaching-staff salaries. Any security or caution deposit cannot exceed 50 percent of the composite annual fee. | AnnuallyCPI + 5% or salary rise | DFRC adjudication. |
Sources and note: the state Acts, rules and notifications named above; the Right to Education Act, 2009 (Section 13); the Andhra Pradesh fee Government Orders; the Gujarat Education Department fee-exemption notification (2018); and the Madras High Court order of July 2026. Fee rules change often, and several states revise their figures on multi-year cycles. This page is general information for promoters and school leaders, not legal advice. Confirm the current notification with the relevant state authority, or with us, before finalising a fee structure.
One-time charges: admission fees, development fees and deposits
The rules reach the one-time charges too, and the backstop everywhere is the Right to Education Act's capitation bar: an oversized admission or development fee is treated as an illegal capitation fee. A few states set specific limits.
Maharashtra
The one-time admission fee cannot exceed one month's tuition fee, and each term fee is capped at one month's tuition per term.
Delhi
The development fee is capped at 10 percent of annual tuition, and caution money must be refundable with interest.
Uttar Pradesh
A security or caution deposit cannot exceed 50 percent of the composite annual fee, and is refundable with interest.
Gujarat
The school cannot collect a deposit under any head, and cannot collect more than one quarter's fee at a time.
Everywhere else, the committee or the approved fee proposal sets the total, and the capitation bar is the real limit on one-time charges. The one-month-tuition admission rule is specific to Maharashtra; it is not a national rule, and it does not come from the CBSE or ICSE bye-laws.
How to ascertain the fee for a new CAIE or IB school
Cambridge Assessment International Education (CAIE) and International Baccalaureate (IB) schools are premium, high-cost operations, so the fee has to be built from the cost of running the school and then reality-checked against the catchment, not set by copying a competitor. Five steps, in order.
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Model the mature school, not Year 1
Cost the school at roughly 85 to 90 percent occupancy across six blocks: academic salaries (usually half or more of operating cost, driven by your student-to-teacher ratio and the premium for Cambridge or IB trained faculty), board and programme costs (authorization, annual and per-candidate fees, curriculum and assessment), facilities (depreciation or lease of an asset-heavy campus, utilities and upkeep), administration and technology, marketing, and a reasonable surplus for reinvestment, not profit.
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Turn it into a grade-differentiated ladder
The cost to serve rises with grade. The senior stage, the IB Diploma or A Level, is the most expensive to run, with the smallest cohorts, laboratories, examinations and university guidance; pre-primary is the least. The fee should escalate by stage, because a single flat fee misprices both ends.
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Reality-check against the catchment
Triangulate the cost-built number against comparable international-school fees by grade and against demonstrated willingness to pay in the catchment. The cost build tells you what you must charge; the catchment tells you what you can. If the two do not meet, the model (ratio, campus specification, board) is wrong, not the fee.
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Lay the state rules on top
A premium Cambridge or IB school still takes state recognition and sits under the state fee regime and the Right to Education capitation bar set out in the map above. In a committee state, the premium fee has to survive a costed file, which is exactly why the bottom-up build matters. In a state that locks a three year block, the opening number is the number you live with.
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Fund the ramp with capital, not early parents
A new school carries almost its full fixed cost against thin enrolment for years. Price at steady-state economics and fund the loss-making ramp from promoter capital. You cannot load the first cohort for the empty seats, and the rules will not let you.
Fee regulation reshapes your financial model, state by state
The practical takeaway is that a K-12 financial model cannot be standardised across India. The same asset-heavy, premium campus is underwritten very differently depending on where it stands.
In committee-approval states like Gujarat, a premium fee has to be earned upfront: the capital expenditure (CAPEX) and the facilities behind it must be documented and defensible, because the Fee Regulatory Committee tests the fee against proven cost. In Parent-Teacher Association driven states like Maharashtra, the constraint is not a one-time filing but a standing relationship, because incremental revenue depends on carrying the parent body with you every cycle. And in states where the last notification has lapsed, such as Andhra Pradesh, or where the state's power to cap fees is contested, such as Karnataka, the safe move is to model conservatively and confirm the live position before committing.
Price to the formula, not the market
Most states lock the fee for three years, so the opening number is the number you live with. Set it to the state's formula and evidence base from day one, because you rarely get a mid-cycle reset.
Build a costed CAPEX file
In committee states, a premium fee survives only if the capital expenditure and facilities behind it are documented. Assemble that evidence before you file, not after a rejection.
Put the parent committee on the calendar
Delhi, Maharashtra and Rajasthan route fee approval through parents. Design the committee and the approval window into your launch timeline, not as an afterthought.
Stay inside the sub-limits
Capitation is barred everywhere under the RTE Act. Development fees, security deposits and one-time charges have their own caps, for example 10 percent of tuition in Delhi and 50 percent of the annual fee for deposits in Uttar Pradesh. Model them within the limits.
Which grades to launch, and why phasing sets the economics
Fees and phasing are one decision: the grades you open decide the operating model, and the model decides the fee. Two forces pull against each other. On the demand side, expected revenue per seat is the fee multiplied by the probability the seat fills, and for an unproven brand the entry grades fill far more easily than the middle ones. On the fee side, regulation caps increases, not entry levels, so the fee you set at entry is the anchor everything compounds from, and in the flat three year states you cannot touch it for three years. Which force wins is the real question.
Start high: Grade 6 and up
Open at Grade 6, the start of Cambridge Lower Secondary or the IB Middle Years Programme (MYP), where a high fee is defensible, and grow upward. You anchor a high fee from day one, ride the regulatory ratchet, and reach the full-fee senior grades and a first graduating class in about seven years, exit-ready inside a private-equity fund's horizon. The cost is demand: middle grades are the hardest to fill cold, with no feeder, so this needs capital to fund the ramp and a catchment with real middle-entry demand.
Start low: pre-primary up
Open pre-primary and early primary, where an unproven brand fills fastest, and let each cohort promote upward to build an organic feeder. You get the easiest admissions and a pipeline, but low average revenue per student for years, a long road to a first graduating class, and, if you open all ten grades at once, a heavy cost base against thin enrolment. This suits a capital-constrained promoter more than a returns-driven fund.
The deciding question: can you command a premium in the early years?
What separates the two plays is a single test: can your brand deliver, and visibly signal, enough value at pre-primary to justify a premium fee there? For most schools the answer is no. Playgroup is hard to differentiate, parents will not pay a premium for it, so the rational move is to skip the low-willingness years and anchor at Grade 6. That is why so many new schools start there.
But a brand with genuine pedigree, campus, boarding and outcomes can command a premium even at nursery, and then starting foundation-up becomes the first-best: you capture the full fourteen-year journey at premium fees and build the feeder at the same time. That path needs patient or strategic capital and a long horizon to a first graduating class, which is why it belongs to brand-led operators, not a short-hold fund.
So the pragmatic answer for most entrants: unless you have a brand that can fill pre-primary at a premium, open a focused foundation (pre-primary to Grade 3 or 4), add a single anchor Grade 6 if you want early senior-fee revenue, then add a grade a year upward. You get fill-rate now and a high, compounding anchor as you climb, and you defer the expensive senior build until you have the students and the track record to justify it.
CAIE or IB, and the one exception. The logic holds for both boards, but the timing differs. IB is play-based at its primary stage, the Primary Years Programme (PYP), which suits a foundation-first launch, while its Diploma is the most authorization and capital-intensive senior stage, so it rewards deferring the top grades the most. Cambridge is more modular and lighter to phase upward. The one case that overrides all of the above is pre-committed demand: converting an existing school, an anchor corporate or community catchment, or a feeder you already control. Absent that, cold middle grades underfill.
Reading fee regulation as a state-selection filter
For a private-equity or strategic investor, the state fee regime is not red tape, it is a direct read on pricing power and revenue predictability, and it belongs in the entry screen alongside catchment, land and talent. The frequency table above is, in effect, an investability map.
Annual escalation, real headroom
States that let you raise fees every year with room to move: Haryana and Uttar Pradesh at CPI plus 5 percent annually, and Maharashtra, whose 15 percent every two years is the single biggest step available. You anchor an entry fee, then compound it.
Flat blocks and hard caps
The flat three-year states (Gujarat, Rajasthan, Tamil Nadu) reward a high, well-justified entry anchor but give no in-block flexibility, so a pricing mistake is locked for three years. Committee and exemption-limit regimes compress the premium you can defend.
Contested or tightening
Regimes where the state's power to set fees is itself unsettled (Karnataka), or where policy is tightening against operators, such as Punjab's proposed 5 percent cap with retroactive refunds. Price in the regulatory risk, or look elsewhere.
Then combine the two levers: choose a state whose regime lets you price and escalate, and anchor a high, defensible entry fee at the grade where you launch. State selection and grade phasing are the same decision seen from two ends.
Setting fees for a new school?
RAYSolute builds the feasibility study, fee structure and Detailed Project Report (DPR) a new campus needs to price correctly and defend that price to the regulator. We map your state's rules to your cost base and your catchment.
or email aurobindo@raysolute.com