Professional tax is a type of direct tax that is levied on those who earn money from their jobs, professions, or trading. A lawyer, teacher, doctor, chartered accountant, and other practicing professionals are examples of practicing professionals. Employers deduct the tax from the employee’s monthly salary, which is then deposited with the state governments. Apart from salaried employees, professionals pay it directly to the government.
What is Professional Tax
The term “professional tax” may be one of those that does not entirely reflect the true meaning of the term. It is not, according to its name, a tax imposed solely on professionals. It’s a tax placed on all kinds of professions, trades, and employment, and it’s based on the income generated by those professions, trades, and jobs. It is imposed on employees, self-employed individuals, freelancers, professionals, and those who earn more than the monetary level.
According to Article 246 of the Indian Constitution, only Parliament has the authority to create laws relating to the Union List, which includes income taxes. Only the Concurrent and State lists give the state the authority to enact legislation. Professional tax is a deductible payment under the Income Tax Act of 1961, and it can be deducted from taxable income. Professional tax, on the other hand, is a type of income tax levied by the state government (not all states in the country chose to levy professional tax). Despite being an income tax, the State Government is also entitled to pass legislation regarding professional tax under Article 276 of the Indian Constitution, which deals with taxes on professions, trades, callings, and employment.
Professional Tax Payment Procedure & Need to File Tax Return
This is an inquiry that is specific to a specific state. A professional tax, on the other hand, can be paid online or offline in most cases. Professional tax returns must also be filed at predetermined periods, depending on the requirements of the state.
In-Charge of Collecting & Paying Professional Tax
The Commercial Tax Department is in charge of collecting professional tax. It is collected by the individual states’ commercial tax departments, and it eventually ends up in the municipal corporation’s treasury. Those who are accountable for paying professional taxes are:
An employer (corporations, partnership businesses, sole proprietorships, and so on) who is also a person carrying on a trade or profession is obligated to pay professional tax on that trade or profession, subject to any monetary thresholds set by the individual State’s legislation. To pay professional tax on his trade/profession and deduct the tax from his employees, the employer must register and get both a professional tax registration certificate and a professional tax enrolment certificate. Furthermore, depending on the legislation in each state, separate registration for each office may be required.
When it comes to employees, an employer is responsible for deducting and paying professional tax to the state government, subject to any monetary restrictions set by the state statute.
Professional Taxation in India
The state government levies a distinct kind of professional tax in each state. Article 276 of the Constitution, which authorizes the State Government to levy professional tax, establishes a maximum threshold of Rs 2,500 above which no professional tax can be levied All state has its own set of laws and regulations that govern the state’s professional tax. To pay professional tax, however, all states use a slab system depending on income.
Andhra Pradesh’s Professional Tax Rate
- If the monthly salary or wage in Andhra Pradesh’sup to Rs 15,000 then Andhra Pradesh’sprofessional tax rate will be NIL.
- If the monthly salary or wage in Andhra Pradesh is between Rs 15,001 to Rs 20,000 then Andhra Pradesh’sprofessional tax rate will be Rs 150 per month.
- If the monthly salary or wage in Andhra Pradesh is greater than Rs 20,000 then Andhra Pradesh’sprofessional tax rate will be Rs 200 per month.
Karnataka’s Professional Tax Rate
- If the Monthly salary or wage in Karnataka is up to Rs 15,000 then Karnataka’s professional tax rate will be NIL.
- If the Monthly salary or wage in Karnataka is greater than Rs 15,000 then Karnataka’s professional tax rate will be Rs 200 per month.
States where Professional Tax Rate is Applicable
The list of states where the Professional Tax rate is applicable are given in the table below:
|State||Period of deduction||Income slabs||Tax amount|
|Andhra Pradesh||Monthly||Up to Rs 15,000||Nil|
|Rs 15,001 to Rs 20,000||Rs 150|
|More than Rs 20,000||Rs 200|
|Assam||Monthly||Up to Rs 10,000||Nil|
|Rs 10,001 to Rs 15,000||Rs 150|
|Rs 15,001 to Rs 25,000||Rs 180|
|More than Rs 25,000||Rs 208|
|Bihar||Yearly||Up to Rs 3 lakh||Nil|
|Between Rs 3 lakh to Rs 5 lakh||Rs 1,000|
|Between Rs 5 lakh to Rs 10 lakh||Rs 2,000|
|Above Rs 10 lakh||Rs 2,500|
|Jharkhand||Yearly||Up to Rs 3 lakh||Nil|
|Between Rs 3 lakh to Rs 5 lakh||Rs 1,200|
|Between Rs 5 lakh to Rs 8 lakh||Rs 1,800|
|Between Rs 8 lakh to Rs 10 lakh||Rs 2,100|
|Above Rs 10 lakh||Rs 2,500|
|Gujarat||Monthly||Up to Rs 5999||Nil|
|Rs 6000 to Rs 8999||Rs 80|
|Rs 9000 to Rs 11999||Rs 150|
|More than Rs 12000||Rs 200|
|Karnataka||Monthly||Up to Rs 15,000||Nil|
|Above Rs 15,000||Rs 200|
|Kerala||Half-yearly||Up to Rs 11,999||Nil|
|Rs 12,000 to Rs 17,999||Rs 120|
|Rs 18,000 to Rs 29,999||Rs 180|
|Rs 30,000 to Rs 44,999||Rs 300|
|Rs 45,000 to Rs 59,999||Rs 450|
|Rs 60,000 to Rs 74,999||Rs 600|
|Rs 75,000 to Rs 99,999||Rs 750|
|Rs 1,00,000 to Rs 1,24,999||Rs 1,000|
|Above Rs 1,25,000||Rs 1,250|
|Madhya Pradesh||Monthly||Up to Rs 2,25,000||Nil|
|Between Rs 2,25,001 to Rs 3,00,000||Rs 1,500 (Rs 125 Per Month)|
|Between Rs 3,00,001 to Rs 4,00,000||Rs 2,000 (Rs 166 Per Month For 11 Months And Rs 174 For 12th Month)|
|Above Rs 4,00,001||Rs 2,500 (Rs 208 Per Month For 11 Months And Rs 212 For 12th Month)|
|Maharashtra||Monthly||Up to Rs 7,500||Nil|
|Between Rs 7,501 to Rs 10,000||Rs 175 (Nil for women)|
|Above Rs 10,000||Rs 200|
|Rs 300 (Employer has to deduct in the February month only)|
|Manipur||Yearly||Up to Rs 50,000||Nil|
|Rs 50,000 onwards to Rs 75,000||Rs 1,200|
|Rs 75,000 onwards to Rs 1,00,000||Rs 2,000|
|Rs 1,00,000 onwards to Rs 1,25,000||Rs 2,400|
|Above Rs 1,25,000||Rs 2,500|
|Meghalaya||Yearly||Up to Rs 50,000||Nil|
|Between Rs 50,001 to Rs 75,000||Rs 200|
|Between Rs 75,001 to Rs 1,00,000||Rs 300|
|Between Rs 1,00,001 to Rs 1,50,000||Rs 500|
|Between Rs 1,50,001 to Rs 2,00,000||Rs 750|
|Between Rs 2,00,001 to Rs 2,50,000||Rs 1,000|
|Between Rs 2,50,001 to Rs 3,00,000||Rs 1,250|
|Between Rs 3,00,001 to Rs 3,50,000||Rs 1,500|
|Between Rs 3,50,001 to Rs 4,00,000||Rs 1,800|
|Between Rs 4,00,001 to Rs 4,50,000||Rs 2,100|
|Between Rs 4,50,001 to Rs 5,00,000||Rs 2,400|
|Above Rs 5,00,001||Rs 2,500|
|Mizoram||Monthly||Up toRs 5,000||Nil|
|Between Rs 5,001 to Rs 8,000||Rs 75 (Assessee may pay in lump sum Rs 900 per annum)|
|Between Rs 8,001 to Rs 10,000||Rs 120 (Assessee may pay in lump sum Rs 1440 per annum)|
|Between Rs 10,001 to Rs 12,000||Rs 150 (Assessee may pay in lump sum Rs 1800 per annum)|
|Between Rs 12,001 to Rs 15,000||Rs 180 (Assessee may pay in lump sum Rs 2160 per annum)|
|Above Rs 15,001||Rs 208 (Assessee may pay in lump sum Rs 2500 per annum)|
|Nagaland||Monthly||Up to Rs 4,000||Nil|
|Between Rs 4,001 to Rs 5,000||Rs 35|
|Between Rs 5,001 to Rs 7,000||Rs 75|
|Between Rs 7,001 to Rs 9,000||Rs 110|
|Between Rs 9,001 to Rs 12,000||Rs 180|
|Above Rs 12,001||Rs 208|
|Odisha||Yearly||Up to Rs 1,60,000||Nil|
|Between Rs 1,60,001 to Rs 3,00,000||Rs 1,500|
|Above Rs 3,00,001||Rs 2,500|
|Puducherry||Yearly||Up to Rs 99,999||Nil|
|Between Rs 1,00,000 to Rs 2,00,000||Rs 250|
|Between Rs 2,00,001 to Rs 3,00,000||Rs 500|
|Between Rs 3,00,001 to Rs 4,00,000||Rs 750|
|Between Rs 4,00,001 to Rs 5,00,000||Rs 1,000|
|Above Rs 5,00,001||Rs 1,250|
|Punjab||Monthly||Above Rs 2,50,000||Rs 200|
|Sikkim||Monthly||Up to Rs 20,000||Nil|
|Between Rs 20,001 to Rs 30,000||Rs 125|
|Between Rs 30,001 to Rs 40,000||Rs 150|
|Above Rs 40,000||Rs 200|
|Tamil Nadu||Monthly||Up to Rs 21,000||Nil|
|Between Rs 21,001 to Rs 30,000||Rs 135|
|Between Rs 30,000 to Rs 45,000||Rs 315|
|Between Rs 45,001 to Rs 60,000||Rs 690|
|Between Rs 60,001 to Rs 75,000||Rs 1,025|
|Above Rs 75,000||Rs 1,250|
|Telangana||Monthly||Up to Rs 15,000||Nil|
|Between Rs 15,001 to Rs 20,000||Rs 150|
|Above Rs 20,001||Rs 200|
|Tripura||Yearly||Up to Rs 7,500||Nil|
|Between Rs 7,501 to Rs 15,000||Rs 1,800|
|Above Rs 15,001||Rs 2,496|
|West Bengal||Monthly||Up to Rs 10,000||Nil|
|Between Rs 10,001 to Rs 15,000||Rs 110|
|Between Rs 15,001 to Rs 25,000||Rs 130|
|Between Rs 25,001 to Rs 40,000||Rs 150|
|Above Rs 40,000||Rs 200|
States where Professional Tax Rate is Not Applicable
|5||Andaman and Nicobar Islands|
|9||Jammu & Kashmir|
|13||Dadra and Nagar Haveli|
Professional Tax Regulation Penalty
While the actual amount of penalty or penal interest may depend on the respective State’s legislation, a penalty may be levied by all such states for not registering once professional tax o77 legislation becomes applicable. Moreover, there are also penalties for not making the payment within the due date and also failing to file the return within the specified due date.
In Maharashtra, a penalty of Rs 5 per day is applied for late registration, the interest of 1.25 percent per month for late payment, a penalty of 10% of the amount of tax in case of late/non-payment of professional tax, and a penalty of Rs 1000 – Rs 2000 for late submission of the return.
I’m a self-employed professional. Is it necessary for me to pay Professional Tax?
Yes, Professional Tax applies to professionals whose income above the stipulated limit as outlined in your state’s Professional Tax Laws.
Is it necessary to file a tax return?
Yes, Professional tax returns must be filed at predetermined periods, depending on the requirements of the state.
What is the method of calculating Professional Tax?
Professional income tax is calculated using predetermined slabs based on monthly or annual earnings. In India, these slabs differ from state to state. It is usually Rs 200 every month, provided that the total PT for the financial year does not exceed Rs 2,500.