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.”
In this blog:
You can navigate to the topics directly from here.
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 :
- Andhra Pradesh
- Assam
- Bihar
- Gujarat
- Karnataka
- Kerala
- Madhya Pradesh
- Meghalaya
- Odisha
- Sikkim
- Tamil Nadu
- Telangana
- Tripura
- West Bengal
- Maharashtra
- Jharkhand
- Manipur
- Mizoram
- Pondicherry
- 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 salary | Tax levied per month |
Up to ₹15000 | Nil |
Between ₹ 15,001 – ₹ 20,000 | ₹150 |
₹20,001 or above | ₹200 |
Assam
Monthly salary | Tax levied per month |
Up to ₹10,000 | Nil |
₹10,001- ₹15,000 | ₹150 |
₹15,001-₹24,999 | ₹180 |
₹25,000 or above | ₹208 |
Bihar
Monthly salary | Tax levied per month |
Up to ₹25,000 | Nil |
₹25,001 – ₹ 41,666 | ₹83.33 |
₹ 41,667 – ₹ 83,333 | ₹ 166.67 |
₹ 83,334 or above | ₹208.33 |
Gujarat
Monthly salary | Tax levied per month |
Up to ₹5,999 | Nil |
₹6,000 – ₹8,999 | ₹80 |
₹9000 – ₹11,999 | ₹150 |
₹12,000 or above | ₹200 |
Goa
Monthly salary | Tax levied per month |
Up to ₹15,000 | Nil |
₹15,001 – ₹25,000 | ₹150 |
₹25,001 or above | ₹200 |
Jharkhand
Monthly salary | Tax levied per month |
Up to ₹25,000 | Nil |
₹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 salary | Tax levied per month |
Up to ₹14,999 | Nil |
₹ 15,000 or above | ₹200 |
Kerala
Monthly salary | Tax levied per month |
Up to ₹1,999 | Nil |
₹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 salary | Tax levied per month |
Up to ₹7,500 | Nil |
₹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 salary | Tax levied per month |
Up to ₹18,750 | Nil |
₹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 salary | Tax levied per month |
Up to ₹4,250 | Nil |
₹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 salary | Tax levied per month |
Up to ₹4,166 | Nil |
₹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 salary | Tax levied per month |
Up to ₹4,000 | Nil |
₹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 salary | Tax levied per month |
Up to ₹13,304 | Nil |
₹13,305 – ₹25,000 | ₹125 |
₹25,001 or above | ₹200 (for the first 11 months) ₹300 (for the last month) |
Pondicherry
Monthly salary | Tax levied per month |
Up to ₹16,666 | Nil |
₹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 salary | Tax levied per month |
₹20,833 or above | ₹200 |
Tamil Nadu
Monthly salary | Tax levied per month |
Up to ₹3,500 | Nil |
₹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 salary | Tax levied per month |
Up to ₹15,000 | Nil |
₹15,001 – ₹20,000 | ₹150 |
₹20,001 or above | ₹200 |
Tripura
Monthly salary | Tax levied per month |
Up to ₹5,000 | Nil |
₹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 salary | Tax levied per month |
Up to ₹10,000 | Nil |
₹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.
Still Have Queries?
We are very excited to assist you in all ways possible.
Related Articles
How Can A Company Register For The Startup India Scheme?
We have already discussed the various features and benefits of the Startup India Scheme at length now. Let us now understand the process of registering a company for the scheme.In This Blog: Eligibility Criteria For The Startup India Scheme Registration Process...
What Is A Foreign Company As Per Companies Act, 2013 (2023)
What Is A Foreign Company As Per Companies Act, 2013
What Are The Regulations Applicable To A LLP?
A Limited Liability Partnership is a partnership in which some or all partners have limited liabilities. To be functional in India, one of the partners is required to be an Indian citizen and resident. We will go through the regulations applicable to a LLP. It is...
Stay Up to Date With The Latest News & Updates
Join Our Newsletter
Get updates on all regulatory changes and reminders for deadlines
Follow Us
Yes we are Omnipresent!