If you are a salaried individual, then you must have seen a deduction of professional tax from your salary every month either in your Form 16 or Salary slips. Unlike as the name suggests, it is not levied only to professionals rather it is a tax on all kinds of professions, trades, 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. Let us understand why is it levied and how is it different from income tax.
What is Professional Tax?
Professional tax is levied by the state government and is one of the sources of income for the state government (some states chose not to levy this tax). This tax is used to improve the services for professionals in that state. State Government is also empowered to make laws with respect to professional tax. Your employer pays this tax to the state government on your behalf. The amount of deduction is generally INR 200, it differs from state to state.
Who is Responsible for deducting Profession Tax?
In the case of salaried individuals and wage earners, the employer is liable to deduct professional 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 employee’s salary and pay. Click here to check the list of forms for payment of 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.
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) |
| Upto 7500 for Men | Nil |
| Upto 10000 for Women | Nil |
| 7501 to 10000 for Men | 175 |
| More than 10000 | 200 ( And 300 for February) |
Gujarat (Effective from 01/04/2022)
| Income per month (INR) | Tax per month (INR) |
| Upto 12000 | Nil |
| More than 12000 | 200 |
Karnataka
| Income per month (INR) | Tax per month (INR) |
| Upto 15000 | Nil |
| More than 15000 | 200 |
Tamil Nadu (Effective from 01/04/2022)
| Income per month (INR) | Tax per month (INR) |
| Upto 21000 | Nil |
| 21,001 to 30,000 | 135 |
| 30,001 to 45,000 | 315 |
| 45,001 to 60,000 | 690 |
| 60,001 to 75,000 | 1025 |
| More than 75,000 | 1250 |
Consequences of not getting registered for Professional Tax
If a person fails to get registration, then he will be liable for 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.
Procedure to Pay Professional Tax
Profession tax can be paid either online/offline. The interval for return filing can be monthly, annually or semi-annually based on the law of the state.
FAQs
As professional tax is levied by the state government, it usually differs from state to state. Each state has its own slab that it declares and the profession tax is deducted based on these slabs.
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.
There are a few categories of persons exempted from this tax:
– Senior citizens
– The parent of a mentally challenged child
– Persons or parents of children suffering from physical disability