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What is Professional Tax? Rates, Due Dates

Updated on: 23 May, 2024 06:31 PM

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 as to 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
(Monthly salary/wages)
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 vary depending on the policies of each state. 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.

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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- Are there any exemptions on professional tax?

Yes, there are certain exemptions that 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 to 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 is exempt from Professional tax in Maharashtra?

Senior citizens of age above 65 and handicapped persons having more than 40 % disability, and parents of 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- Is professional tax refundable?

No, professional tax is usually not refundable once it's paid. It's a state-mandated levy for professionals collected by the state government.

However, there is a way to reduce the impact on your taxes. You can claim a deduction for the professional tax you've paid while filing your income tax return. This deduction is available under Section 16(iii) of the Income Tax Act, 1961.

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.

CA Abhishek Soni
CA Abhishek Soni

Abhishek Soni is a Chartered Accountant by profession & entrepreneur by passion. He is the co-founder & CEO of Tax2win is amongst the top 25 emerging startups of Asia and authorized ERI by the Income Tax Department. In the past, he worked in EY and comes with wide industry experience from telecom, retail to manufacturing to entertainment where he has handled various national and international assignments.