Professional Tax
Professional tax is a state-level tax in India imposed on professionals and salaried individuals, calculated based on their income, with rates varying across different states.
What is a Professional Tax, and Who Levies it?
Professional tax is a direct tax that is deducted from your gross salary by your employer.
This tax is levied by the state government and thus can vary depending on the state you live in. The maximum limit of which you can be charged is Rs 2500.
The tax is calculated based on the slabs. Each state can have different salary slab rates for the calculation of professional tax. Andhra Pradesh, Maharashtra, Gujarat are some of the states where this tax is applicable.
Professional Tax Rate
Professional tax being levied by the state government is different in different states. Every state has its own laws and regulations to govern the professional tax of that particular state. However, all states follow a slab system based on income to levy professional tax.
Further, Article 276 of the Constitution, which empowers the state government to levy professional tax, also has provided for a maximum cap of Rs.2,500, beyond which professional tax cannot be charged to any person.
Few illustrative slabs in the country
- Professional tax rate slabs in Karnataka
Monthly salary/wage up to Rs 25,000 | NIL |
Monthly salary/wage > Rs 25,000 | Rs 200 per month |
- Professional tax rate slabs in Karnataka
Monthly salary/wage up to Rs 15,000 | NIL |
Monthly salary/wage between Rs 15,001 – Rs 20,000 | Rs 150 per month |
Monthly salary/wage > Rs 20,000 | Rs 200 per month |
- Professional tax rate slabs in West Bengal
Monthly salary/wage up to Rs 10,000 | Nil |
Monthly salary/wage between Rs 10,001 – Rs 15,000 | Rs 110 |
Monthly salary/wage between Rs 15,001 – Rs 25,000 | Rs 130 |
Monthly salary/wage between Rs 25,001 – Rs 40,000 | Rs 150 |
Monthly salary/wage > Rs 40,000 | Rs 200 |
- Professional tax rate slabs in Maharashtra
Monthly salary/wage up to Rs 7,500 (men) | Nil |
Monthly salary/wage between Rs 7,501 – Rs 10,000 (men) | Rs 175 |
Monthly salary/wage > Rs 10,000(men) | Rs 200 (Rs 300 for the month of February) |
Monthly salary/wage up to Rs 25,000 (women) | Nil |
Monthly salary/wage above Rs 25,000 (women) | Rs 200 (Rs 300 for the month of February) |
- Professional tax rate slabs in Tamil Nadu
Monthly salary/wage up to Rs 21,000 | Nil |
Monthly salary/wage between Rs 21,001– Rs 30,000 | Rs 135 |
Monthly salary/wage between Rs 30,001 – Rs 45,000 | Rs 315 |
Monthly salary/wage between Rs 45,001 – Rs 60,000 | Rs 690 |
Monthly salary/wage between Rs 60,001 – Rs 75,000 | Rs 1025 |
Monthly salary/wage > Rs 75,001 | Rs 1250 |
- Professional tax rate slabs in Telangana
Monthly salary/wage up to Rs 15,000 | NIL |
Monthly salary/wage between Rs 15,000 – Rs 20,000 | Rs 150 per month |
Monthly salary/wage > Rs 20,000 | Rs 200 per month |
- Professional tax rate slabs in Kerala
Monthly salary/wages up to Rs 11,999 | Nil |
Monthly salary/wage between Rs 12,000 – Rs 17,999 | Rs 120 |
Monthly salary/wage between Rs 18,000 – Rs 29,999 | Rs 180 |
Monthly salary/wage between Rs 30,000 – Rs 44,499 | Rs 300 |
Monthly salary/wage between Rs 45,000 – Rs 59,999 | Rs 450 |
Monthly salary/wage between Rs 60,000 – Rs 74,999 | Rs 600 |
Monthly salary/wage between Rs 75,000 – Rs 99,999 | Rs 750 |
Monthly salary/wage between Rs 1,00,000 – Rs 1,24,999 | Rs 1000 |
Monthly salary/wage > Rs 1,25,000 | Rs 1250 |
Who is Responsible to Collect Professional Tax?
Professional tax is collected by the Commercial Tax Department. The commercial tax department of the respective states collects it which ultimately reaches the fund of the municipal corporation.
Who is Responsible to Pay Professional Taxes?
- In the case of employees, an employer is a person responsible for deducting and paying professional tax to the state government subject to the monetary threshold, if any, provided by the respective State’s legislation.
- An employer (corporates, partnership firms, sole proprietorship, etc.), also being a person carrying on trade/profession, is also required to pay professional tax on his trade/profession again subject to the monetary threshold, if any, provided by respective state’s legislation.
In such a case, the employer needs to register and obtain both a professional tax registration certificate to be able to pay professional tax on his trade/profession and a professional tax enrolment certificate to be able to deduct the tax from his employees and pay. Further, separate registration may be required for each office, depending on the respective state’s legislation. - Persons who are carrying on freelancing business without any employees are also required to register themselves subject to the monetary threshold, if any, provided by the respective State’s legislation.
However, a professional tax levy is subject to the exemption provided by the respective State to certain categories. For example, parents or guardians of any person who is suffering from mental retardation or blind persons are exempted, among others, from the levy of Karnataka Professional tax.
How to Pay Professional Tax? Is Any Return to be Filed?
Professional tax is a direct tax levied by the state government. As a result, the form of payment may differ from one state to the next.
Professional tax, on the other hand, can be paid both online and offline. To pay professional tax, you must go to the official website of the relevant state.
It is important to note that if you are a salaried individual, then such professional tax will be collected and remitted by your employer.
Exemptions in Professional Tax
Even though everyone who earns a regular income (salary) is expected to pay the professional tax, some people are exempt. As a result, if you fall into one of the categories listed below, you are exempt from paying professional tax.
- Member of Force (Governed by Army, Air Force, Navy Act)
- An individual suffering from mental or physical disability. Disability can be blindness, deafness, etc.
- Parent of a child suffering from a disability
- Charitable hospitals are present in places that come below the taluk level
- Badli workers (temporary workers that are employed in a factory)
- Individuals running an educational institute in respect of their branches teaching classes upto 12th standard or pre-university.
- A foreign individual who has been employed by the relevant state
- Any individual above 65 years
- Women who are solely engaged as agents under the Government’s Mahila Pradhan Kshetriya Bachat Yojana
Frequently Asked Questions
Yes, professional tax is applicable even for professionals if income exceeds the specified limit as per your Professional Tax Laws applicable in the state where you live.
Professional tax, unlike income tax, is governed by states rather than the federal government. Since Union Territories are under the administration of the Central Government, they are exempt from paying the professional tax.
Professional tax registration is dependent upon the state where you live. For example in Karnataka, it is mandatory for all GST-registered entities to take Professional tax enrollment.
Professional Tax is a deduction against your Gross Salary. Professional is not a part of CTC; instead is a deduction or reduction from your take-home salary.
No, Professional Tax deduction is allowed under section 16 of the Income Tax Act. However, such deduction is allowed only in the Old Tax Regime and not in the New Tax Regime.
No, the Professional Tax one deducted cannot be refunded. This tax is paid to the state government, and there is no refund mechanism.
Professional Tax applicability depends on the respective state’s slab rates. Depending on your Salary income, professional tax slab rates will be applied. For example, in Karnataka, if your salary exceeds Rs 25,000, then a Professional tax of Rs 200 per month will be a deduction.
Professional Tax comes under State Legislator. And applicability of Professional Tax is a state subject. The state has the authority to collect Professional Tax of not more than Rs 2500 per year. Certain exemption are provided to Professional Tax depending upon the respective state.