Last Updated on Feb 24, 2022 by Gayathri Ravi

The tax levied on all earning individuals is known as Professional Tax. It is levied by the State Governments, and each state has different tax slabs. It is not limited to those who fit the traditional definition of a ‘professional’, such as lawyers and doctors. 

Let us see who all are eligible to pay this tax.

This article covers:

Who is charged under the professional tax?

The professional tax applies to all employees, traders, businesses owners, and professionals. Individuals, HUFs, companies, and cooperatives are all liable to pay. Moreover, any association of persons or body of individuals, whether they are incorporated or not, are charged with professional tax. Any freelancers and entrepreneurs are also liable to pay the tax. All states follow the system where the amount to be paid is determined via tax slabs. 

Let us understand the method of calculation.

Tax slabs in different states

Professional tax is calculated on the basis of the annual income of the person. The total tax liability is calculated and divided into monthly instalments. Further, there is a limit of Rs. 2,500 on this tax. A higher amount cannot be charged in a particular financial year. 

In India, around 20 states charge professional tax. Among the Union Territories, the tax is applicable in Puducherry only. Mentioned below are the tax slabs for some major states that levy the tax.

Karnataka

Income (per month)Amount of tax (per month)
Rs. 15,000 or less0
More than Rs. 15,000Rs. 200

Telangana

Income (per month)Amount of tax (per month)
Less than Rs. 15,0000
Rs. 15,000 – Rs. 20,000Rs. 150
More than Rs. 20,000Rs. 200

Maharashtra

Income (per month)Amount of tax (per month)
For men: Upto Rs. 7,5000
For women: Upto Rs. 10,0000
Rs. 7,500 – Rs. 10,000Rs. 175
More than Rs. 10,000Rs. 200/Rs. 300 for the month of February

Andhra Pradesh

Income (per month)Amount of tax (per month)
Rs. 15,000 or less0
Rs. 15,001 – Rs. 20,000Rs. 150
More than Rs. 20,000Rs. 200

Gujrat 

Income (per month)Amount of tax (per month)
Less than Rs. 6,0000
Rs. 6,000 but less than Rs. 9,000Rs. 80
Rs. 9,000 but less than Rs. 12,000Rs. 150
Rs. 12,000 and aboveRs. 200

West Bengal

Income (per month)Amount of tax (per month)
Rs. 10,000 or less0
More than Rs. 10,000 upto Rs. 15,000Rs. 110
More than Rs. 15,000 upto Rs. 25,000Rs. 130
More than Rs. 25,000 upto Rs. 40,000Rs. 150
More than Rs. 40,000Rs. 200

How is the professional tax charged?

The duty to charge and pay the taxes depends upon the nature of your job. Suppose you are a salaried employee or a wage earner. In that case, it is the responsibility of your employer to deduct the amount from your salary every month and pay it to the government. To be able to deduct the tax from employees’ salaries, the employer needs a registration certificate. 

The second case is when you are self-employed, i.e. run your own business or profession. For this purpose, you are required to pay the tax yourself. You must obtain an enrollment certificate from the certified authority in order to pay the tax correctly.

The amount is to be deposited to the Commercial Taxes Department of the relevant State Government.

Mode of payment

You can pay the p tax offline as well as online. To make the payment online, you can follow the following steps:

  • Open the official website of the Goods and Service Tax.
  • Click on the link for e-payments.
  • Choose the status that applies to you and enter your PAN or TAN details.
  • If you are an employer, choose the option for the Certificate of Registration. In case you are self-employed, go for the Certificate of Enrollment option. 
  • Select the applicable financial year. Now choose the amount applicable as per your location and your tax slab. 
  • Enter your contact information. Make the payment via your debit or credit card or the net banking option.
  • Download the generated challan for payment/acknowledgement slip. 

Tax deduction

A good takeaway here is that you can claim a deduction for the professional tax while filing your Income Tax Return. According to the Income Tax Act, 1961, the amount paid as professional tax can be deducted from your gross salary under section 126 (iii).

Associated penalties

If you fail to pay the p tax, you attract a penalty. Different State Governments charge different amounts as penalties, depending on your tax slab. The penalty may be applicable in case of non-payment, delay in payment, or failure to file returns. 

In conclusion

Professional tax is one kind of income tax but does not come under the purview of the Central Government. It is charged by certain State Governments and is levied on all earning individuals. Make sure you update yourself with the latest tax slabs and make the payment on time to avoid any penalty. Consult your tax advisor/CA for professional advice on taxes. 

Ayushi Mishra

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