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Professional Tax - What Is Professional Tax, Rates, Due Date, Compliance

By Mohammed S Chokhawala

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Updated on: Jul 1st, 2024

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7 min read

Many salaried employees might be very well aware of the term ‘professional tax’ as it would have been mentioned in the payslips/Form 16 issued to them. But all of them may or may not understand what it is and why it is appearing in their payslips/Form 16 as a deduction from their salary income. Hence, this article is an attempt to provide a better picture of what and why professional tax is deducted and whether the salaried class people are only bearing it. 

What is a Professional Tax, and Who Levies it?

The nomenclature ‘Professional tax’ could be one of those terms which do not completely convey the real meaning of the term. Unlike the name suggests, it is just not the tax levied only on professionals. 

Professional tax is a tax on all kinds of professions, trades, and employment and 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 monetary threshold if any.

As per Article 246 of the Constitution of India, only the Parliament has the exclusive power to make laws with respect to the Union List, which includes taxes on income. The state has the power to make laws only with respect to the Concurrent and state list.

However, professional tax though is a kind of tax on income levied by the state government (not all states in the country choose to levy professional tax). The state government is also empowered to make laws with respect to professional tax though being a tax on income under Article 276 of the Constitution of India, which deals with tax on professions, trades, callings and employment.

It may be noted that professional tax is a deductible amount for the purpose of the Income-tax Act  1961 and can be deducted from taxable income.

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 Andhra Pradesh

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

Consequences of Violation of Professional Tax Regulation

While the actual amount of penalty or penal interest may depend on the respective state’s legislation, a penalty may be levied by all such states for not registering once professional tax legislation becomes applicable.

Further, there are also penalties for not making the payment within the due date and failing to file the return within the specified due date.

In Maharashtra, for example, the penalty for late registration is Rs 5 per day. There is also 1.25% to 2% monthly interest for late payment, a 10% penalty on the tax amount for non-payment/delay of professional tax, and a penalty of Rs.1,000 for late return submission.

Related Articles:
1. Professional Tax in Maharashtra
2. Professional Tax in Karnataka
3. Professional Tax in West Bengal
4. Professional Tax in Delhi
5. Professional Tax in Telangana
6. Professional Tax in Gujarat
7. Professional Tax in Bihar
8. Professional Tax in Jharkhand
9. Professional Tax in Odisha
10. Professional Tax in Tamil Nadu
11. Professional Tax in Punjab
12. Professional Tax in Kerala
13. Professional Tax in Assam
14. Professional Tax in Andhra Pradesh

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Frequently Asked Questions

I am a freelance professional. Am I liable to pay professional tax?

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.

Is there any professional tax for Union Territory also?

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.

I am a GST registered professional. Is it mandatory to take Professional tax enrollment ?

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.

Is professional tax part of CTC?

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.

Is professional tax deductible in the new tax regime?

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.

Can professional tax can be refunded?

No, the Professional Tax one deducted cannot be refunded. This tax is paid to the state government, and there is no refund mechanism. 

Is professional tax the same for all employees?

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.

Can we skip professional tax?

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.

About the Author

I'm a chartered accountant, well-versed in the ins and outs of income tax, GST, and keeping the books balanced. Numbers are my thing, I can sift through financial statements and tax codes with the best of them. But there's another side to me – a side that thrives on words, not figures. Read more

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Quick Summary

Professional tax is levied on all kinds of professions, trades, and employment based on income. Each state has its own tax rates and slab system. Commercial Tax Dept. collects taxes, and employers are responsible for deducting and paying them. Taxes can be paid online or offline. There are exemptions for certain categories. Violations can result in penalties and interest.

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