Professional Tax: Everything You Need to Know

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What is Professional Tax
Table Of Contents
What is Professional Tax?
PT: A Deductible Expense
Who Levies Professional Tax in India?
How to Register/File Professional Tax?
Registration:
Tax Deduction and Filing:
Professional Tax Applicable States Across India
Applicable States
Non-Applicable States
Professional Tax Exemptions
Who is Responsible for Deducting Professional Tax?
Overview of Professional Tax in India
Penalties for Not Filing Professional Tax
FAQs

Many salaried employees have encountered the term "professional tax" on their payslips or Form 16. However, not everyone understands what it is and why it is deducted from their salary income. When you examine your payslip, you'll often see a small deduction alongside HRA, conveyance, and basic salary break-ups. This deduction, typically around ₹200, is known as professional tax.

Professional tax varies by state, and in some regions, you might find no deduction under this heading. This article aims to clarify what professional tax is, why it is deducted, and whether it only affects salaried individuals.

What is Professional Tax?

The term "professional tax" can be broad. It applies not just to professionals like doctors and lawyers, but also to salaried employees, business owners, and freelancers. This tax is levied on income generated from professions, trades, or employment, exceeding a certain threshold set by the state government.

PT: A Deductible Expense

One benefit of professional tax is its deductibility.  The Income Tax Act of 1961 allows you to subtract the professional tax you pay from your taxable income when filing your income tax return. This reduces your overall tax liability.

Who Levies Professional Tax in India?

It's important to distinguish professional tax from income tax. Income tax is a central government levy on your overall income. In contrast, professional tax is a specific tax imposed by state governments based on Article 276 of the Constitution, which grants them the power to tax professions, trades, and employment. Not all states choose to implement professional tax.

How to Register/File Professional Tax?

Managing professional tax involves both registration and regular filing. Here's a breakdown of the key requirements:

Registration:

  1. Within 30 Days: Businesses must register for professional tax within 30 days of hiring their first employee. Similarly, independent professionals need to register within 30 days of starting their practice.
  2. State Tax Department: Applications for registration certificates are submitted to the state tax department where the business operates or the professional resides.
  3. Multiple Locations: Businesses with operations in multiple states need to register separately with the relevant tax department in each location.

Tax Deduction and Filing:

  1. Salary Deduction: Employers are responsible for deducting professional tax from their employees' salaries or wages.
  2. Payment Frequency: The frequency of tax payments varies by state, but it often depends on the number of employees. Businesses with a higher number of employees (the specific threshold can vary) might need to make payments more frequently, such as bi-monthly (by the 15th of the next month following the quarter's end). For smaller businesses, payments might be submitted quarterly.

Professional Tax Applicable States Across India

Applicable States

Professional tax in Maharashtra

Monthly Gross Salary (Amount)PT Payable Amount
Up to ₹7,500 (for men)₹0
₹7,501 to ₹10,000 (for men)₹175/month
Above ₹10,000 (for men)

₹200/month (except February)

₹300 for February

Up to ₹25,000 (for women)₹0
Above ₹25,000 (for women)

₹200/month (except February)

₹300 for February

Professional tax in Karnataka

Monthly Gross Salary (Amount)PT Payable Amount
Up to ₹14,999₹0
Above ₹15,000₹200/month

Professional tax in Telangana

Monthly Gross Salary (Amount)PT Payable Amount
Up to ₹15,000₹0
₹15,001 to ₹20,000₹150
Above ₹20,000₹200

Professional tax in West Bengal

Monthly Gross Salary (Amount)PT Payable Amount
Up to ₹10,000₹0
₹10,001 to ₹15,000₹110
₹15,001 to ₹25,000₹130
₹25,001 to ₹40,000₹150
Above ₹40,001₹200

Professional tax in Andhra Pradesh

Monthly Gross Salary (Amount)PT Payable Amount
Up to ₹15,000₹0
₹15,001 to ₹20,000₹150
Above ₹20,000₹200

Professional tax in Tamil Nadu

Average Monthly Income (Amount)PT Payable Amount
Up to ₹21,000₹0
₹21,001 to ₹30,000₹130
₹30,001 to ₹45,000₹315
₹45,001 to ₹60,000₹690
₹60,001 to ₹75,000₹1,025
Above ₹75,000₹1,250

Professional tax in Kerala

Salary (Amount)PT Range
Up to ₹11,999₹0
₹12,000 to ₹17,999₹120
₹18,000 to ₹29,999₹180
₹30,000 to ₹44,999₹300
₹45,000 to ₹59,999₹450
₹60,000 to ₹74,999₹600
₹75,000 to ₹99,999₹750
₹1,00,000 to 1,24,999₹1,000
Above ₹1,25,000₹1,250

Professional tax in Jharkhand

Annual Salary (Amount)PT Range
Up to ₹3,00,000₹0
₹3,00,001 to ₹5,00,000₹1,200
₹5,00,001 to ₹8,00,000₹1,800
₹8,00,001 to ₹10,00,000₹2,100
Above ₹10,00,000₹2,500

Professional tax in Nagaland

Salary (Amount)PT Range
Up to ₹4,000₹0
₹4,001 to ₹5,000₹35
₹5,001 to ₹7,000₹75
₹7,001 to ₹9,000₹110
₹9,001 to ₹12,000₹180
Above ₹12,000₹208

Professional tax in Sikkim

Salary (Amount)PT Range
Up to ₹20,000₹0
₹20,001 to ₹30,000₹125
₹30,001 to ₹40,000₹150
Above ₹40,000₹200

Professional tax in Assam

Salary (Amount)PT Range
Up to ₹4,000₹0
₹4,001 to ₹5,000₹35
₹5,001 to ₹7,000₹75
₹7,001 to ₹9,000₹110
₹9,001 to 12,000₹180
Above ₹12,000₹208

Professional tax in Manipur

Salary (Amount)PT Range
Up to ₹50,000₹0
₹50,001 to ₹75,000₹1,200
₹75,001 to ₹1,00,000₹2,000
₹1,00,001 to ₹1,25,000₹2,400
Above ₹1,25,000₹2,500

Professional tax in Odisha

Salary (Amount)PT Range
Up to ₹1,60,000₹0
₹1,60,001 to ₹3,00,000₹125
Above ₹3,00,000

₹200/month for starting 11 months

₹300 for the last month

Professional tax in Bihar

Annual Salary (Amount)PT Range
Up to ₹3,00,000₹0
₹3,00,001 to ₹5,00,000₹1,000
₹5,00,001 to ₹10,00,000₹2,000
Above ₹10,00,000₹2,500

Professional tax in Meghalaya

Salary (Amount)PT Range
Up to ₹5,000₹0
₹5,001 to ₹75,000₹200
₹75,001 to ₹1,00,000₹300
₹1,00,001 to ₹1,50,000₹500
₹1,50,001 to ₹2,00,000₹750
₹2,00,001 to ₹2,50,000₹1,000
₹2,50,001 to ₹3,00,000₹1,250
₹3,00,001 to ₹3,50,000₹1,500
₹3,50,001 to ₹4,00,000₹1,800
₹4,00,001 to ₹4,50,000₹2,100
₹4,50,001 to ₹5,00,000₹2,400
Above ₹5,00,000₹2,500

Professional tax in Puducherry

Salary (Amount)PT Range
Up to ₹99,999₹0
₹1,00,000 to ₹2,00,000₹250
₹2,00,001 to ₹3,00,000₹500
₹3,00,001 to ₹4,00,000₹750
₹4,00,001 to ₹5,00,000₹1,000
Above ₹5,00,000₹1,250

Professional tax in Gujarat

Monthly Salary (Amount)PT Range
Up to ₹12,000₹0
Above ₹12,000₹200/month

Professional tax in Madhya Pradesh

Annual Salary (Amount)PT Range
Up to ₹2,25,000₹0
₹2,25,000 to ₹3,00,000₹125/month
₹3,00,001 to ₹4,00,000

₹166 for 11 months

₹174 for the 12th month

Above ₹4,00,001

₹208 for 11 months

₹212 for the 12th month

Professional tax in Mizoram

Monthly Salary (Amount)PT Range
Up to ₹5,000₹0
₹5,001 to ₹8,000₹75
₹8,001 to ₹10,000₹120
₹10,001 to ₹12,000₹150
₹12,001 to ₹15,000₹180
Above ₹15,001₹208

Professional tax in Punjab

Salary (Amount)PT Range
All individuals with salaried income₹200/month
All individuals with business or income from profession₹2,400/annually

Professional tax in Tripura

Salary (Amount)PT Range
Up to ₹7,500₹0
₹7,501 to ₹15,000₹150/month
Above ₹15,000₹208/month

Non-Applicable States

These states do not levy professional tax as of now:

  1. Andaman and Nicobar Islands
  2. Arunachal Pradesh
  3. Chandigarh
  4. Chhattisgarh
  5. Dadar and Nagar Haveli
  6. Daman and Diu
  7. Delhi
  8. Goa
  9. Haryana
  10. Himachal Pradesh
  11. Jammu and Kashmir
  12. Ladakh
  13. Lakshadweep
  14. Rajasthan
  15. Uttar Pradesh
  16. Uttarakhand

Professional Tax Exemptions

Professional tax exemptions can vary slightly by state. Under the Professional Tax Rules, the following individuals are exempt from paying professional tax:

Exemption CriteriaDescription
Parents of children with permanent physical or mental disabilitiesParents are exempt if they have children with permanent disabilities.
Members of the armed forcesIncludes members of auxiliary forces or reservists, as defined by the Army Act, Air Force Act, and Navy Act.
Temporary workers in the textile industryBadli workers in the textile sector are exempt.
Individuals with permanent physical disabilitiesPersons suffering from permanent physical disabilities, including blindness, are exempt.
Women working under specific government savings schemesWomen exclusively engaged as agents under the Mahila Pradhan Kshetriya Bachat Yojana or Directors of Small Savings are exempt.
Parents or guardians of individuals with mental disabilitiesExemption for parents or guardians caring for individuals with mental disabilities.
Senior citizensIndividuals aged 65 years and above are exempt.

Who is Responsible for Deducting Professional Tax?

Employers must deduct professional tax from their employees' salaries and remit the collected amount to the state government. They are also required to submit a return to the tax department in the specified form and within the given timeframe, including proof of payment.

Overview of Professional Tax in India

States in India can levy a maximum professional tax of INR 2500 per year. The amount paid is deductible under the Income Tax Act. Professional tax provides revenue for state governments to support welfare and development initiatives. Employers are responsible for deducting this tax from salaries and paying it to the state government, while other individuals (freelancers or business owners) must pay directly or through local bodies.

Penalties for Not Filing Professional Tax

Failure to comply with professional tax regulations can result in penalties, which vary by state. States may impose fines for not registering when professional tax legislation becomes applicable. Additionally, there are penalties for late payment and failure to file returns on time.

FAQs

  • What is meant by professional tax?

    Professional tax is a tax on all professions, trades, and employment based on the income earned from these activities. It is levied on employees, business owners, freelancers, and professionals whose income exceeds a certain threshold.

  • What is PT full form in salary?

    PT stands for "Professional Tax."

  • What is the professional tax in Gurgaon?

    Gurgaon, now known as Gurugram, is in Haryana. Currently, Haryana does not impose professional tax.

  • What if I don't pay professional tax?

    If you don't pay professional tax, you may face:

    1. Fines,

    2. Interest on late payments,

    3. Potential legal issues, and 

    4. You won't be able to claim the deduction on your income tax return, increasing your tax liability.

  • How is PT calculated?

    Professional tax is calculated monthly based on your gross salary after deducting items like EPF contributions, gratuity, leave deductions, or any past loans from your employer.

  • Is professional tax refundable?

    Professional tax is non-refundable once it is paid.

  • What is PT in salary slip?

    PT in your salary slip stands for "Professional Tax," a tax deducted by your employer from your gross salary before paying your net salary.

  • Is PT part of CTC?

    Yes, PT is part of CTC as it is one of the compulsory deductions along with Provident Fund and Income Tax.

  • Is PT deductible from taxable income?

    PT (professional tax) paid is deductible under Section 16(iii) of the Income Tax Act, 1961.

  • What is my professional tax slab?

    The best way to find information about professional tax slabs in your state is to visit the website of your state's tax department. You can search for "[Your State Name] Professional Tax Department" to find the website. Consulting a tax professional who specializes in your state's tax regulations can also be helpful.

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