Within about a year, Delhi and Punjab have both tightened how private schools set fees, and in different ways. Delhi routes every fee proposal through committees that include parents. Punjab caps the annual increase in the total fee. For anyone who owns, values or invests in a school, fee growth is now a regulated variable in two of the country's largest markets for private schooling. This article sets out what each law does, what courts have said about the limits of regulation, and what to ask before you value or buy a school.
Two laws, two designs
| Delhi | Punjab | |
|---|---|---|
| Instrument | Delhi School Education (Transparency in Fixation and Regulation of Fees) Act, 2025. The Assembly passed the Bill on 8 August 2025, and Tribune reported its notification on 13 December 2025 | An amendment to the Punjab Regulation of Fee of Unaided Educational Institutions Act. Reported as an ordinance in July 2026, then passed by the Assembly on 10 August 2026 |
| Schools covered | Private unaided schools. Careers360 reported in August 2025 that it would reach about 1,700 private schools, against about 300 under the earlier rules | Unaided institutions; about 7,800 schools are covered, according to press reports |
| How increases are decided | A school-level committee with the principal as secretary, three teachers, five parents chosen by draw and an Education Department observer. The approved structure binds for three academic years. Parents can appeal to a district committee and then a revision committee | Up to 5% a year without approval. Larger increases need prior permission from the district regulatory authority. A district committee headed by the Deputy Commissioner examines proposals |
| Limits on fee heads | Tribune reports development fee limited to 10% of annual tuition and surplus funds barred from being diverted to individuals, trusts or sister organisations | The cap covers the total fee, including all mandatory charges, not tuition alone |
| Penalties and refunds | Saga Legal reports fines of ₹1 to 5 lakh for a first breach and ₹2 to 10 lakh for a repeat, rising to up to twice that and possible loss of recognition for persistent defiance. Excess fees must be refunded, with interest according to Tribune | Fines of ₹50,000 to ₹1 lakh, with possible loss of recognition or affiliation for continued breach. Outlook reports a refund where the three-year rise exceeds 15%; reports differ on whether past excess will be recovered |
Delhi has also adjusted the rollout. A Removal of Difficulties Order of 1 February 2026, reported by Millennium Post, says fees for 2025-26 cannot exceed those in effect from 1 April 2025. It also sets short timelines to form the committees and file fee proposals for the first three-year block from 2026-27. Challenges to the Act are pending in the Delhi High Court and the Supreme Court.
The two designs carry different risks. A committee model makes the outcome depend on process and on who sits on the committee. A cap model makes it depend on arithmetic. Either way, the owner no longer sets the number alone.
What the courts have said
The legal line has long been the same: a school may fix its own fees, but it may not profiteer or charge capitation fees. The Delhi High Court restated this on 9 October 2025, in a Division Bench ruling reported by IndiaLaw. It held that the Directorate of Education has only limited power over recognised unaided schools' fees under the Delhi School Education Act, 1973: it can act against profiteering, commercialisation and capitation, but cannot fix or redesign fee structures. The Court relied on T.M.A. Pai, Islamic Academy and Modern School v Union of India (2004). An earlier Single Judge ruling in 2023 had accepted that an unaided school may keep a reasonable surplus for expansion and improvement.
That ruling concerned the older 1973 law. The 2025 Act is a different statute, with committee approval written in, and the Delhi Act is under challenge. We have not found a ruling on the validity of either the Delhi Act or the Punjab amendment.
Do not assume the outcome. Plan for the law as it stands, and track the pending cases. A ruling that narrows a regulator's power would change the model for every school in that state.
What it means for valuation and structure
Business Standard (22 July 2026) notes that fee increases remain subject to competition and, in many states, to government regulation, and that investors say they focus more on expanding networks, improving occupancy and building brands than on raising fees. Our own notes on disclosed school multiples and why private equity is buying school chains show the same logic: value rests on enrolment and operations more than on price increases.
Our recommendations for owners and buyers:
- Model fee growth at the cap, or lower, in cap states. Treat any approval-based increase as a downside case, not the base case.
- Check which charges count. Punjab's cap includes mandatory charges beyond tuition, and Delhi limits development fee. A school that earns through add-on charges may have less room than its headline fee suggests.
- Test related-party flows. Tribune reports that Delhi's Act bars diverting surplus to individuals, trusts or sister organisations. If a school pays rent, management fees or brand fees to a related entity, have counsel confirm they stand up under the state's rules. See our note on private equity and non-profit schools.
- Check refund exposure. Both states can order refunds of excess fees. Ask what has been collected, and whether any excess is likely.
- Keep records ready. The Delhi High Court ruling notes that Section 17(3) of the 1973 Act already requires a fee statement before each session. Clean, dated fee records make approval and any dispute easier.
Fee regulation is a due-diligence item for any school transaction, in the same way as title and affiliation. A seller who can show clean fee records, approvals and a defensible fee structure will be easier to price. Other states have their own fee rules, some of them older, so the first question in any deal is which state's law applies.
Common questions
Is there a cap on private school fee increases in India?
How are private school fees decided in Delhi?
Can the government control private school fees?
Buying, selling or restructuring a school?
MAS Advisory is partner-led, start to finish. Talk to us before fee rules shape your price.
Sources: Saga Legal, "Strengthening oversight through legislation: Delhi's school fee reforms", Bar & Bench (20 August 2025); Tribune (13 December 2025) on the notified Delhi Act; Millennium Post on Delhi's Removal of Difficulties Order (February 2026); Careers360 (August 2025) on the number of schools covered; Outlook India (19 July 2026) and Careers360 (August 2026) on Punjab; IndiaLaw on the Delhi High Court Division Bench ruling of 9 October 2025; SCC Times on the 2023 Single Judge ruling; Business Standard (22 July 2026). Press reports differ on some details of both laws, including penalties and refunds, so check the current text of each law. General guidance only. We do not give tax or legal opinions; confirm current requirements with qualified counsel before acting.