Professional Tax : Meaning, Rates, and Applicability

author portrait

Divya Singhvi

Income Tax
Professional Tax
Salary Components
Salary Income

In your Form 16 or Salary slips you may have come across “Professional Tax” along with other Salary breakups. Your employer pays this tax to the state government on your behalf. The deduction is generally of INR 200. The amount of professional tax differs from state to state. Not all states in India chose to levy this tax. State Government is also empowered to make laws with respect to profession tax.

What is Professional Tax?

It is not only the tax levied on professionals, but it is a tax on all kinds of professions, trades, and employment. And it is levied based on the income of such profession, trade, and employment. It is levied on employees, a person carrying on the business including freelancers, professionals, etc., subject to income exceeding the threshold if any. This tax is levied by a state government. Further, this tax can be paid either online/offline.

ITR for Salaried Individuals
CA Assisted Income Tax Return filing for individuals having salary, one house property & income from other sources.
[Rated 4.8 stars by customers like you]
ITR for Salaried Individuals
CA Assisted Income Tax Return filing for individuals having salary, one house property & income from other sources.
[Rated 4.8 stars by customers like you]

Professional Tax Slab

The rate of professional tax varies from one state to another. However, the limit has been set to Rs. 2500 per year as per Article 276 of the Constitution. Therefore, each state declares a slab, and the tax is deducted on the basis of these slabs. Here are some illustrative Profession Tax slabs in a few states:

Maharashtra

Income per month (INR)Tax per month in INR
Up to 7500 for MenNil
Up to 10000 for WomenNil
7500 TO 10000 for Men175
10000 and above200 ( And 300 for February)

Gujarat:

Income per month (INR)Tax per month (INR)
Upto 5999Nil
6000 to 899980
9000 to 11999150
More than 12000200

Karnataka:

Income per month (INR)Tax per month (INR)
Upyo 15000Nil
More than 15000200

Tamil Nadu:

Income per month (INR)Tax per month (INR)
Upto 21000Nil
21,001 to 30,000100
30,001 to 45,000235
40,001 to 60,000510
60,001 to 75,000760
75,001 and above1095

Who is Responsible for deducting Profession Tax?

Self-employed persons who carry out their profession or trade on their own and fall in the ambit of profession tax are liable to pay the tax themselves to the state government. In the case of salaried individuals and wage earners, the employer is liable to deduct profession tax on a monthly basis. Therefore, the employer needs to register and obtain both the Professional Tax Registration Certificate to be able to pay professional tax on his trade or profession and Professional Tax Enrolment Certificate to be able to deduct the tax from his employees and pay. List of forms for payment of Profession Tax.

Guide : Salary Income and Taxes
Salary Income is simply the paycheque you get every month from your employer.
Read More
Guide : Salary Income and Taxes
Salary Income is simply the paycheque you get every month from your employer.
Read More

Consequences

If a person fails to get registration, then he will be liable to a penalty for the period during which he remains unregistered. However, the actual amount of penalty or interest shall depend upon State’s Legislation. Non-payment of tax or a late payment attracts a 10% additional tax.

FAQs

Why does Profession tax differ from one state to another?

As professional tax is levied by the state government, it usually differs from one state to another. Each state has its own slab that it declares and the profession tax is deducted based on these slabs.

Is Profession tax applicable in Union territories?

As Union Territories are small regions of the country, they tend to generate lower revenue than states. Hence, professional tax is not applicable to employees working in a Union Territory.

Who is exempted professional tax?

There are a few categories of people that get benefit of tax exemption:
– Senior citizens are exempt from professional tax.
– Parent of a mentally challenged child is exempt from this tax.
– Persons or parents of children suffering from physical disability are exempt from paying professional tax.

    Leave a Reply

    Your email address will not be published. Required fields are marked *

    Close Bitnami banner
    Bitnami