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What is Professional Tax? Rates, Due Dates
If you are a salaried person, you may have come across the term Professional Tax as it is on your salary slip. It is a deduction that you see from your salary every month, mentioned in Form 16 or the payslips issued to you by the employer. You must be confused why it is appearing in your salary slips or Form 16 as a deduction from the salary income. The article below will discuss Professional Tax in detail, and let’s begin with what it means.
What is Professional Tax?
Professional Tax is a tax on all kinds of professionals, whether self-employed, salaried, or into trading, This tax is levied on employees carrying on the business, including professionals, freelancers, etc, subject to income exceeding the monetary threshold if any. The professional tax rate varies from one state of the country to another, and there are also various states which do not have any Professional Tax. This tax implication completely depends on the state government.
Professional Tax Rates in Different States
Professional Tax is levied by the State Government on the income of the assessee. Under Article 276 of the Indian Constitution, the state governments are empowered to decide the rate for the professional tax in the state. The cap limit to levy professional tax is Rs 2500 beyond which professional tax cannot be charged to any person.
Every state has its own slabs for this tax, and here is a glimpse of the same –
|Professional Tax Rate in Maharashtra
|For Men||Nil up to Rs. 7500|
|From Rs. 7500 – Rs. 10000||Rs. 175|
|For Women||Nil up to Rs. 10000|
|For all Above Rs. 10000||Rs. 200 and Rs. 300 for the last month|
|Professional Tax Rate in West Bengal|
|Up to Rs. 10000||Nil|
|From Rs. 10001 – Rs. 15000||Rs. 110|
|From Rs. 15001 – Rs. 25000||Rs. 130|
|From Rs. 25001 – Rs. 40000||Rs. 150|
|Over and Above Rs. 40000||Rs. 200|
|Professional Tax Rate in Andhra Pradesh|
|Up to Rs. 15000||Nil|
|From Rs. 15001 – Rs. 20000||Rs. 150|
|Above Rs. 20000||Rs. 200|
|Professional Tax Rate in Tamil Nadu|
|Up to Rs. 21000||Nil|
|From Rs. 21001 – Rs. 30000||Rs. 135|
|From 30001 – Rs. 45000||Rs. 315|
|From Rs. 45001 – Rs. 60000||Rs. 690|
|From Rs. 60001 – Rs. 75000||Rs. 1025|
|From Rs. 75001 and above||Rs. 1250|
|Professional tax rate in Karnataka|
|Monthly salary/wage up to Rs 15,000||NIL|
|Monthly salary/wage > Rs 15,000||Rs 200 per month|
|Professional tax rate slabs in Kerala|
|Monthly salary/wage up to Rs 11999||Nil|
|Monthly salary/wage between Rs 12000 – Rs 17999||Rs 120|
|Monthly salary/wage between Rs 18000 – Rs 29999||Rs 180|
|Monthly salary/wage between Rs 30000 – Rs 44999||Rs 300|
|Monthly salary/wage between Rs 45000 – Rs 59999||Rs 450|
|Monthly salary/wage between Rs 60000 – Rs 74999||Rs 600|
|Monthly salary/wage between Rs 75000 – Rs 99999||Rs 750|
|Monthly salary/wage between Rs 100000 – Rs 124999||Rs 1000|
|Monthly salary/wage > Rs 125000||Rs 1250|
Please Note:-For the month of February, the Professional Tax is a little higher than the rest of the eleven months in the year.
Who pays Professional Tax?
If you are in the salaried profession, you have to pay professional Tax; if you are self-employed, you pay this tax; if you are a Doctor, Engineer, or Chartered accountant – Professionals, and you have to pay this tax. If you are running a business that is your source of income, you have to pay this tax. So, if your income crosses the threshold mentioned by the states, you are liable to pay the professional tax.
Who Collects Professional Tax?
For a salaried employee, the employer collects the tax from the employee by deducting the same from the salary. Then it is deposited with the Commercial Tax Department. The Commercial Tax Department collects all the Professional Tax in the states where it is applicable, and then the fund is sent to the municipal corporation.
How to pay professional tax?
The payment procedure of the Professional Tax varies according to the state again. Each state government has its own website, and you can pay the tax online. Here are different ways you can do it.
- You can use the Profession Tax Enrolment Number 12 Digit (numeric), to pay the tax.
- You can also do it by using your Tax Registration Number
- Tax Government ID of 12 digit
- Vat Number
After you submit the details and process the payment, you can check the status of your payment as well on the website.
Penalties for violating Professional Tax regulation
The penalties for not registering for Professional Tax or not paying the same within the due date every month varies as per the state in the country again. However, generally, for non-registration, a penalty of Rs. 5 per day is levied. If you pay after the due date, you are charged 10% extra on professional tax as a penalty.
Professional Tax is levied on your income if it crosses the minimum mark set by each of the states who have professional tax in their tax regime. It is directly deducted from the salary of the salaried employees if their employers are registered with the State Legislation. The others who are in the different professions of any nature are liable to pay professional tax as per the different slabs/ rates prevailing in the state. The Commercial Tax Department collects this tax and disburses to the municipal corporation for their funds. You can pay this tax online by using your Tax registration number or the ID and other details on their websites. If you do register or missed paying the tax on time, there are certain penalties on the same.
Frequently Asked Questions
Q- Is Professional Tax Mandatory?
If you are a salaried person, then paying Professional Tax is mandatory.
Q- Why the professional tax is different in a different state?
It varies because it is decided by the government of the State and not by the central Government. Every state decides the slabs according to their perspective.
Q- Is their Professional Tax in Union Territories?
No, if you are from a Union Territory of India, you do not need to pay any Professional Tax. This is because of the fact that in a Union Territory the level of income is lower than any state.
Q- Is there any kind of exemptions?
Yes, there is certain exemption which can be availed and these exemptions also vary from state to state. Some of the crucial exemptions are –
- The parents of a person who is mentally ill or retarded are not liable to pay Professional Tax. This is also applicable for the people who have a serious physical disability.
- People with a disability for life.
- People who are from the army, navy or air force. People with related jobs like reservists, auxiliary forces are also exempted from paying this tax.
Q- Who are exempt from Professional tax in Maharashtra?
Senior citizens of age above 65 and handicapped persons having more than 40 % disability and parent of a physically disabled and mentally retarded children are exempted from paying professional tax in Maharashtra.
Q- What is the maximum amount of professional tax levied by a state?
Rs 2500 is the maximum amount of professional tax which can be levied by any state.
Q- What is the due date for payment of professional tax?
If the entity has enrolled prior to 31st May, the due date for payment is 30th June. In case of enrolments made after 31st May, the due date for payment is 30 days of the date of enrolment.
Q- How much professional tax is deducted from salary?
As per Article 276(2) of the Indian Constitution, Professional Tax is deducted by the employer from the salaries of employees every month and remitted to the state. The maximum amount of professional tax that can be levied in a year is Rs 2500.
Q- What is the benefit of professional tax?
Professional tax paid during the year is allowed as a deduction from salary subject to a maximum deduction of Rs 2500.