Professional Tax in India: Everything Explained

If you look at your salary slip, you can find a breakup of your basic salary and notice a small deduction mentioned on it. This deduction is known as professional tax. The amount of this tax may differ from one State to another.

Want to know more about professional tax?

Let’s start from the basics!

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What Is Professional Tax and Who Is Liable to Pay It?

Professional tax or P-tax is a direct tax that the State Government imposes on individuals who earn either by practising a profession, employment, trade or calling or running a freelancing business.

The State Government deducts professional tax under section 16 (III) of the Income Tax Act, 1961. As per this section, the professional tax is allowed for deduction from an individual’s gross salary while filing income tax returns.

Common people may get confused thinking this tax is applicable only for professionals. Contrarily, this tax is for all earning individuals. You can see professional tax at the deduction side of your payslip. The amount deducted is ₹200 and, as stated earlier, can vary from one State to another. However, the upper limit is set at ₹2500 per annum per individual, which is also the maximum limit State Government can levy.

Please note, not all States levy professional tax. There are some states, including Arunachal Pradesh, Rajasthan, and Haryana, that do not levy this tax.

Now that the definition of professional tax and persons responsible for paying it is clear, let’s learn about the concerned authority and applicability of it.

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Who Collects Professional Tax?

The Commercial Tax Department of respective States collects professional tax which ultimately reaches to the fund of municipality corporation.

In the case of employees, employers collect professional tax every month from monthly salary. Then, they pay this tax to the Government. However, if they fail to pay this tax timely, penalty charges will be imposed on them for not collecting professional tax or paying it to the Government.

Self-employed individuals are liable to pay this tax themselves. Further, professionals who are not working with an employer anymore must register for it through a form. After the form is received by the concerned authority, a registration number will be generated through which they can pay this tax.

Please note certain States also provide a rebate on professional tax provided the tax is paid in a lump sum for a few years. Therefore, it is imperative individuals must be aware of various rules applicable to respective States.

What Are the State-wise Professional Tax Slabs?

Follow the table mentioned below to get a comprehensive idea about professional tax in different states and their tax returns.

State	Monthly Income	Tax Per Month
Karnataka	Up to ₹ 15000	Nil
Karnataka	₹ 15000 onwards	₹200
Maharashtra	Up to ₹ 7500	Nil (for male)
Maharashtra	Up to ₹ 10000	Nil (for female)
Maharashtra	₹ 7500 to ₹ 10000	₹ 175 (for male)
Maharashtra	₹ 10000 onwards	₹ 200 for 11 months + ₹ 300 for 12th month
West Bengal	Up to ₹ 10000	Nil
West Bengal	₹ 10001 to ₹ 15000	₹ 110
West Bengal	₹ 15001 to ₹ 25000	₹ 130
West Bengal	₹ 25001 to ₹ 40000	₹ 150
West Bengal	₹ 40000 onwards	₹ 200
Andhra Pradesh	Less than ₹ 15000	Nil
Andhra Pradesh	₹ 15000 to ₹ 20000	₹ 150
Andhra Pradesh	₹ 20000 onwards	₹ 200
Gujarat	Up to ₹ 5999	Nil
Gujarat	₹ 6000 to ₹ 8999	₹ 80
Gujarat	₹ 9000 to ₹ 11999	₹ 150
Gujarat	₹ 12000 onwards	₹ 200
Kerala (Half-yearly Income Slabs and Half-yearly Tax Payment)	Up to ₹ 11999	Nil
Kerala (Half-yearly Income Slabs and Half-yearly Tax Payment)	₹ 12000 to ₹ 17999	₹ 120
Kerala (Half-yearly Income Slabs and Half-yearly Tax Payment)	₹ 18000 to ₹ 29999	₹ 180
Kerala (Half-yearly Income Slabs and Half-yearly Tax Payment)	₹ 30000 to ₹ 44999	₹ 300
Kerala (Half-yearly Income Slabs and Half-yearly Tax Payment)	₹ 45000 to ₹ 59999	₹ 450
Kerala (Half-yearly Income Slabs and Half-yearly Tax Payment)	₹ 60000 to ₹ 74000	₹ 600
Kerala (Half-yearly Income Slabs and Half-yearly Tax Payment)	₹ 75000 to ₹ 99999	₹ 750
Kerala (Half-yearly Income Slabs and Half-yearly Tax Payment)	₹ 1,00,000 to ₹ 1,24,999	₹ 1000
Kerala (Half-yearly Income Slabs and Half-yearly Tax Payment)	₹ 125000 onwards	₹ 1250

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How to Calculate Professional Tax on Salary?

Currently, there are several online calculators available, which makes the calculation process error-free and less time-consuming.

Professional tax calculation depends on two factors, namely State and income. As there are several states that do not impose a professional tax, individuals residing there need not calculate this. The following table will help to understand this calculation process.

Professional Tax Calculation (Explained With an Example):

State	Salary (Per Month)	Monthly Professional Tax
Working professional in Gujarat	₹20000	₹200
Working professional in Maharashtra	₹20000	₹200 for 11 months + ₹300 in February.

State	Yearly Professional Tax
Working professional in Gujarat	₹2400
Working professional in Maharashtra	₹2500

Who Is Liable to Pay Professional Tax?

The applicability of professional tax is mentioned below,

Individual
Firm
Company
Cooperative Society
Association of Persons or a body of individuals
Hindu Undivided Family (HUF)
LLPs
Clubs
Legal practitioners such as solicitors
Contractors
Medical representatives such as doctors, medical consultants, and dentists
Architects
Chartered Accountants
CS
Surveyors
Engineers
Insurance agents
Tax consultants
Management consultants

What Are the Exemptions in Professional Tax?

Below is a list of individuals who are exempted from professional tax.

Individuals involved in Central Para Military Force (CPMF)
Ex-servicemen.
Individuals who have 40% disability. Here, they have to submit the relevant certificate.
Deaf, dumb or blind individuals who are earning a salary.
Individuals running educational institutions where students of up 12th standard are taught.
Civilian non-combatant or combatant members from the Armed Forces.
Individuals who have a permit for a single three-wheeler or a taxi for carrying goods.
Technicians who have come from different countries but are employed by respective States.

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How to Pay Professional Tax Online?

The professional tax payment process is easy. Here, you have to select a state first. Suppose you are a working individual in Karnataka and want to pay this tax online, then you have to follow the steps mentioned below,

Step-1- Visit the official website of the Karnataka Commercial Tax Department and click on KTP (Karnataka Professional Tax).
Step-2- On the new webpage, choose between self-employed professional or registered employee. Let’s say you have selected a registered employee.
Step-3- Provide Professional Tax Registration Number, company or firm name and other details. Select the period of your payment, i.e. monthly, annually, or as specified. Select the year and month for which the payment is made. Also, enter tax amount and penalty amount (if any).
Step-4- Provide bank details and enter your mobile number. Click on ‘Enter’, and after verifying the provided information, click on ‘Submit’.
Step-5- Click on ‘Click here for Payment’. Then login with credentials and pay professional tax.

Save the challan for future reference.

What Will Happen if You Do Not Pay Professional Tax?

If earning individuals do not pay professional tax, they have to pay penalty charges. Here, the penalty amount or penal interest depends on the respective State. Hence, it can vary from one State to another. Additionally, the State Government may levy penalty charges for non-registration and late return filing.

Read the details carefully and pay professional tax before the due date.

Frequently Asked Questions

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What are the required documents for professional tax registration?

The list of required documents include duly filled form, PAN card copy, Residence proof of partner, director, proprietor, proof of consultation of business, articles of association, memorandum of association, bank cancelled cheque, address proof of business place, establishment certificate, current account statement, and business premise sales proof deed.

Is professional tax applicable in Nagaland?

No, professional tax is not applicable in Nagaland.

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