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Have you ever looked at your salary slip and wondered what the term “professional tax” means?

Let’s answer that very question and discuss it in detail and its exact nature and implications.

Professional tax is a state tax. The state government imposes this particular tax instead of the infrastructure and other facilitating provisions it gives for carrying out the profession. In this sense, the state charges for using its infrastructure and facilities through which the profession or jobs are conducted.

Article 276(2) of the Indian Constitution has provisions for the professional tax charged by the state government wherein the employer deducts the tax from the employees’ salary and eventually, it gets remitted to the state government. The article says:

“….shall be levied and collected on professions, trades, callings, and employments, following the provisions of this Act. Every person engaged in any profession, trade, calling, or employment and falling under one or the other of the classes mentioned in the second column of the Schedule shall be liable to pay to the State Government tax at the rate mentioned against the class of such persons in the third column of the said Schedule. Provided that entry 23 in the Schedule shall apply only to such classes of persons as may be specified by the State Government by notification from time to time.”

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Important Points Regarding Professional Tax


  • The maximum amount that can be deducted under professional tax annually cannot exceed ₹2500.
  • Professional tax with income tax is not the same. The deduction through professional tax is exempted under income tax. If it is chosen to file returns through the new tax regime then, the professional tax won’t be exempted under income tax.
  • It is compulsory to pay professional tax if the person is eligible to do so.
  • Even non-salaried people (who earn income through other means) may be liable to pay professional tax.
  • Following the ‘Professions, Trades, Callings and Employments Act of 2000, professionals earning a monthly income above a specified limit are liable to pay the tax.
  • Freelance professionals are also required to register for payment of professional tax through a special form that gives them a registration number which is used to pay the tax in various banks.

State-wise Provisions and Slabs (FY 2020-21)

Remember, professional tax is a state tax, and the state government levies it on professionals for carrying out their profession in that particular state.

The slabs and provisions differ from state to state. Also, NOT all states impose a professional tax. The following states in India levy professional tax :

  1.  Andhra Pradesh
  2.  Assam
  3.  Bihar
  4.  Gujarat
  5.  Karnataka
  6.  Kerala
  7.  Madhya Pradesh
  8.  Meghalaya
  9.  Odisha
  10.  Sikkim
  11.  Tamil Nadu
  12.  Telangana
  13.  Tripura
  14.  West Bengal
  15.  Maharashtra
  16.  Jharkhand
  17.  Manipur
  18.  Mizoram
  19.  Pondicherry
  20.  Chhattisgarh

If you belong to any of the states not mentioned above, you won’t find professional tax under deductions in your salary slip.

Now, let us look at the different tax rate slabs in each of the aforementioned states –

Andhra Pradesh

Monthly salaryTax levied per month
Up to ₹15000Nil

 

Between ₹ 15,001 – ₹ 20,000₹150
₹20,001 or above₹200

 

Assam

Monthly salaryTax levied per month
Up to ₹10,000Nil
₹10,001- ₹15,000₹150
₹15,001-₹24,999₹180
₹25,000 or above₹208

 

Bihar

Monthly salaryTax levied per month
Up to ₹25,000Nil
₹25,001 – ₹ 41,666₹83.33
₹ 41,667 – ₹ 83,333₹ 166.67
₹ 83,334 or above₹208.33

 

Gujarat

Monthly salaryTax levied per month
Up to ₹5,999Nil
₹6,000 – ₹8,999₹80
₹9000 – ₹11,999₹150
₹12,000 or above₹200

 

Goa

Monthly salaryTax levied per month
Up to ₹15,000Nil
₹15,001 – ₹25,000₹150
₹25,001 or above₹200

 

Jharkhand

Monthly salaryTax levied per month
Up to ₹25,000Nil
₹25,001 – ₹41,666₹100
₹41,667 – ₹66,666₹150
₹66,667 – ₹83,333₹175
₹83,334 or above₹208 (for the first 11 months and ₹212 for the last month)

 

Karnataka

Monthly salaryTax levied per month
Up to ₹14,999Nil
₹ 15,000 or above₹200

 

Kerala

Monthly salaryTax levied per month
Up to ₹1,999Nil
₹2000 – ₹2,999₹20 (payable as ₹120 semi-annually)
₹3000 – ₹4,999₹30 (payable as ₹180 semi-annually)
₹5,000 – ₹7,499₹50 (payable as ₹300 semi-annually)
₹7,500 – ₹9,999₹75 (payable as ₹450 semi-annually)

 

₹10,000 – ₹12,499₹100 (payable as ₹600 semi-annually)
₹12,500 – ₹ 16,666₹125 (payable as ₹750 semi-annually)
₹16,667 – ₹20,833₹166 (payable as ₹1000 semi-annually)
₹ 20,834 or above₹208 (payable as ₹1250 semi-annually)

 

Maharashtra

Monthly salaryTax levied per month
Up to ₹7,500Nil
₹7,501 – ₹10,000₹175
₹10,001 or above₹200 (for the first 11 months) ₹300 (for the last month)

 

Note- Women earning up to ₹10,000 (per month) are exempted from paying professional tax.

Madhya Pradesh

Monthly salaryTax levied per month
Up to ₹18,750Nil
₹18,751 – ₹25,000₹125
₹25,001 – ₹33,333₹167
₹33,334 or above₹208 (for first 11 months) ₹212 (for the last month)

 

Also read: Steps to Incorporate a Foreign Company in India

Manipur

Monthly salaryTax levied per month
Up to ₹4,250Nil
₹4,251 – ₹6,250₹100
₹6,251 – ₹8,333₹167
₹8,334 – ₹10,416₹200

 

₹10,417 or above₹208 (for the first 11 months) ₹212 (for the last month)

 

Meghalaya

Monthly salaryTax levied per month
Up to ₹4,166Nil
₹4,167 – ₹6,250₹16.50
₹6,251- ₹8,333₹25
₹8,334 – ₹12,500₹41.50
₹12,501 – ₹16,666₹62.50
₹16,667 – ₹20,833₹83.33
₹20,834 – ₹25,000₹104.16
₹25,001 – ₹29,166₹125
₹29,167 – ₹33,333₹150
₹33,334 – ₹37,500₹175
₹37,501 – ₹41,666₹200
₹41,667 or above₹208 (for first 11 months) ₹212 (for the last month)

 

Nagaland

Monthly salaryTax levied per month
Up to ₹4,000Nil
₹4,001 – ₹5,000₹35
₹5,001 – ₹7,000₹75

 

₹7,001 – ₹9,000₹110
₹9,001 – ₹12,000₹180
₹12,000 or above₹208

 

Odisha

Monthly salaryTax levied per month
Up to ₹13,304Nil
₹13,305 – ₹25,000₹125
₹25,001 or above₹200 (for the first 11 months) ₹300 (for the last month)

 

Pondicherry

Monthly salaryTax levied per month
Up to ₹16,666Nil
₹16,667 – ₹33,333₹41.66 (₹250 payable semi-annually)
₹33,334 – ₹50,000₹83.33 (₹500 payable semi-annually)
₹50,001 – ₹66,666₹125 (₹750 payable semi-annually)
₹66,667 – ₹83,333₹166.67 (₹1000 payable semi-annually)
₹83,334 or above₹208.33 (₹1250 payable semi-annually)

 

Punjab

Monthly salaryTax levied per month
₹20,833 or above₹200

 

Tamil Nadu

Monthly salaryTax levied per month
Up to ₹3,500Nil
₹3,501 – ₹5,000₹22.50 (₹135 payable semi-annually)
₹5,001 – ₹7,500₹52.50 (₹315 payable semi-annually)
₹7,501 – ₹10,000₹115 (₹690 payable semi-annually)
₹10,001 – ₹12,500₹171 (₹1025 payable semi-annually)
₹12,501 or above₹208 (₹1250 payable semi-annually)

 

Telangana

Monthly salaryTax levied per month
Up to ₹15,000Nil
₹15,001 – ₹20,000₹150
₹20,001 or above₹200

 

Tripura

Monthly salaryTax levied per month
Up to ₹5,000Nil
₹5,001 – ₹7,000₹70 (₹420 payable semi-annually)
₹7,001 – ₹9,000₹120 (₹720 payable semi-annually)
₹9,001 – ₹12,000₹140 (₹840 payable semi-annually)
₹12,001 – ₹15,000₹190 (₹1140 payable semi-annually)
₹15,001 or above₹208 (₹2496 payable semi-annually)

 

West Bengal

Monthly salaryTax levied per month
Up to ₹10,000Nil
₹10,001 – ₹15,000₹110
₹15,001 – ₹25,000₹130
₹25,001 – ₹40,000₹150
₹40,001 or above₹200

 

ANSWERING YOUR QUERIES

Is it compulsory to deduct professional tax?

Professional tax is a source of revenue for the government. It is deducted by the employer from their employee every month and remitted to the state exchequer and in some states sent to the Municipal Corporation. It is mandatory to pay professional tax. The taxpayer is eligible for income tax deduction for this payment.

Who is liable for professional tax?

In case of salaried and wage earners, the tax is liable to be deducted, and the employer is liable to deposit the same with the state government. In case of other class of Individuals, this tax is liable to be paid by the person himself.

Is professional tax mandatory after GST?

Professional tax is a state tax. One needs to register under the Karnataka act and should pay tax from the commencement of business. This registration is mandatory for business whether a person is employed or not.

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