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Introduction to Professional Tax

Professional tax is a tax imposed, by several states in India, on salaried professionals, working in non-government or government entities. Salaried professionals can be Lawyers, Doctors, and Chartered Accountants etc. Professional tax was initially levied in 1949 under Clause (2) of Article 276. This tax is based on the income slabs set by the individual State Governments. Professional tax is almost similar to income tax – the difference between the two is: professional tax is collected by State Government, whereas, Income tax is collected by Central Government. The maximum limit of professional tax, when it was introduced, was Rs. 250. However, in the year 1988, this limit was increased from Rs. 250 to Rs. 2,500. The entire professional tax amount paid, all through the year, is permissible as deduction under Section 16 of the Income Tax Act

In the past years, government from various states have been asking for an increase in the professional tax limit from Rs. 2,500 to Rs. 7,500. However, such requests have not been acknowledged and the maximum professional tax amount that can be imposed by any state continues to be Rs. 2,500. For salaried or wage earners, it is the responsibility of the employer to deduct professional tax, and also deposit the same with the respective state government. For other individuals, professional tax has to be directly paid to the state government or to other local bodies selected to do so. Professional tax needs to be collected and deposited, to the respective state government, as per the timelines provided. In case, professional tax is not deposited on time, late fee and penalty will be applicable

What is Professional Tax Mitigation?

Professional Tax Rates for different States

Below mentioned are state-wise professional tax rates for FY2018-19:

Andhra Pradesh

Salary per month Professional tax charged per month
Salary up to Rs. 15,000 Nil
Salary between Rs. 15,001 and Rs. 20,000 Rs. 150
Salary equal to Rs. 20,001 and above Rs. 200

Assam

Salary per month Professional tax charged per month
Salary up to Rs. 10,000 Nil
Salary between Rs. 10,001 and Rs. 15,000 Rs. 150
Salary between Rs. 15,001 and Rs. 24,999 Rs. 180
Salary equal to Rs. 25,000 and above Rs. 208

Bihar

Salary per month Professional tax charged per month
Salary up to Rs. 25,000 Nil
Salary between Rs. 25,001 and Rs. 41,666 Rs. 83.33
Salary between Rs. 41,667 and Rs. 83,333 Rs. 166.67
Salary equal to Rs. 83,334 and above Rs. 208.33

Goa

Salary per month Professional tax charged per month
Salary up to Rs. 15,000 Nil
Salary between Rs. 15,001 and Rs. 20,000 Rs. 150
Salary equal to Rs. 20,001 and above Rs. 200

Gujarat

Salary per month Professional tax charged per month
Salary up to Rs. 5,999 Nil
Salary between Rs. 6,000 and Rs. 8,999 Rs. 80
Salary between Rs. 9,000 and Rs. 11,999 Rs. 150
Salary equal to Rs. 12,000 and above Rs. 200

Jharkhand

Salary per month Professional tax charged per month
Salary up to Rs. 25,000 Nil
Salary between Rs. 25,001 and Rs. 41,666 Rs. 100
Salary between Rs. 41,667 and Rs. 66,666 Rs. 150
Salary between Rs. 66,667 and Rs. 83,333 Rs. 175
Salary equal to Rs. 83,334 and above Rs. 208 (For initial 11 months its Rs. 208 and for the 12th month its Rs. 212)

Karnataka

Salary per month Professional tax charged per month
Salary up to Rs. 15,000 Nil
Salary between Rs. 15,001 and above Rs. 200

Kerala

Salary per month Professional tax charged per month
Salary up to Rs. 1,999 Nil
Salary between Rs. 2,000 and Rs. 2,999 Rs. 20 or Rs. 120 if paid semi-annually
Salary between Rs. 3,000 and Rs. 4,999 Rs. 30 or Rs. 180 if paid semi-annually
Salary between Rs. 5,000 and Rs. 7,499 Rs. 50 or Rs. 300 if paid semi-annually
Salary between Rs. 7,500 and Rs. 9,999 Rs. 75 or Rs. 450 if paid semi-annually
Salary between Rs. 10,000 and Rs. 12,499 Rs. 100 or Rs. 600 if paid semi-annually
Salary between Rs. 12,500 and Rs. 16,666 Rs. 125 or Rs. 750 if paid semi-annually
Salary between Rs. 16,667 and Rs. 20,833 Rs. 166 or Rs. 1,000 if paid semi-annually
Salary between Rs. 20,884 and above Rs. 208 or Rs. 1,250 if paid semi-annually

Madhya Pradesh

Salary per month Professional tax charged per month
Salary up to Rs. 18,750 Nil
Salary between Rs. 18,751 and Rs. 25,000 Rs. 125
alary between Rs. 25,001 and Rs. 33,333 Rs. 167
Salary equal to Rs. 33,334 and above Rs. 208 (For initial 11 months its Rs. 208 and for the 12th month its Rs. 212)

Maharashtra

Salary per month Professional tax charged per month
Salary up to Rs. 7,500 Nil
Salary between Rs. 7,501 and Rs. 10,000 Rs. 175
Salary above Rs. 10,001 For initial 11 months its Rs. 200 and for the 12th month its Rs. 300
Salary up to Rs. 10,000 (women) Nil

Manipur

Salary per month Professional tax charged per month
Salary up to Rs. 4,250 Nil
Salary between Rs. 4,251 and Rs. 6,250 Rs. 100
Salary between Rs. 6,251 and Rs. 8,333 Rs. 167
Salary equal to Rs. 8,334 and Rs. 10,416 Rs. 200
Salary equal to Rs. 10,417 and above For initial 11 months its Rs. 208 and for the 12th month its Rs. 212

Meghalaya

Salary per month Professional tax charged per month
Salary up to Rs. 4,166 Nil
Salary between Rs. 4,167 and Rs. 6,250 Rs. 16.50
Salary between Rs. 6,251 and Rs. 8,333 Rs. 25
Salary between Rs. 8,334 and Rs. 12,500 Rs. 41.50
Salary between Rs. 12,501 and Rs. 16,666 Rs. 62.50
Salary between Rs. 16,667 and Rs. 20,833 Rs. 83.33
Salary between Rs. 20,834 and Rs. 25,000 Rs. 104.16
Salary between Rs. 25,001 and Rs. 29,166 Rs. 125
Salary between Rs. 29,167 and Rs. 33,333 Rs. 150
Salary between Rs. 33,334 and Rs. 37,500 Rs. 175
Salary between Rs. 37,501 and Rs. 41,666 Rs. 200
Salary above Rs. 41,667 For initial 11 months its Rs. 208 and for the 12th month its Rs. 212

Nagaland

Salary per month Professional tax charged per month
Salary up to Rs. 4,000 Nil
Salary between Rs. 4,001 and Rs. 5,000 Rs. 35
Salary between Rs. 5,001 and Rs. 7,000 Rs. 75
Salary equal to Rs. 7,001 and Rs. 9,000 Rs. 110
Salary equal to Rs. 9,001 and Rs. 12,000 Rs. 180
Salary equal to Rs. 12,000 and above Rs. 208

Odisha

Salary per month Professional tax charged per month
Salary up to Rs. 13,304 Nil
Salary between Rs. 13,305 and Rs. 25,000 Rs. 125
Salary between Rs. 25,001 and above For initial 11 months its Rs. 200 and for the 12th month its Rs. 300

Puducherry (TN)

Salary per month Professional tax charged per month
Salary up to Rs. 3,500 Nil
Salary between Rs. 3,501 and Rs. 5,000 Rs. 16.66
Salary between Rs. 5,001 and Rs. 9,000 Rs. 40
Salary equal to Rs. 9,001 and Rs. 10,000 Rs. 85
Salary equal to Rs. 10,001 and Rs. 12,500 Rs. 126.67
Salary above Rs. 12,501 Rs. 182.50

Sikkim

Salary per month Professional tax charged per month
Salary up to Rs. 20,000 Nil
Salary between Rs. 20,001 and Rs. 30,000 Rs. 125
Salary between Rs. 30,001 and Rs. 40,000 Rs. 150
Salary equal to Rs. 40,001 and above Rs. 200

Tamil Nadu

Salary per month Professional tax charged per month
Salary up to Rs. 3,500 Nil
Salary between Rs. 3,501 and Rs. 5,000 Rs. 22.50
Salary between Rs. 5,001 and Rs. 7,500 Rs. 52.50
Salary equal to Rs. 7,501 and Rs. 10,000 Rs. 115
Salary equal to Rs. 10,501 and Rs. 12,500 Rs. 171
Salary above Rs. 12,501 Rs. 208

Telengana

Salary per month Professional tax charged per month
Salary up to Rs. 15,000 Nil
Salary between Rs. 15,001 and Rs. 20,000 Rs. 150
Salary equal to Rs. 20,001 and above Rs. 200

Tripura

Salary per month Professional tax charged per month
Salary up to Rs. 5,000 Nil
Salary between Rs. 5,001 and Rs. 7,000 Rs. 70
Salary equal to Rs. 7,001 and Rs. 9,000 Rs. 120
Salary equal to Rs. 9,001 and Rs. 12,000 Rs. 140
Salary equal to Rs. 12,000 and Rs. 15,000 Rs. 190
Salary equal to Rs. 15,001 and above Rs. 208

West Bengal

Salary per month Professional tax charged per month
Salary up to Rs. 10,000 Nil
Salary between Rs. 10,001 and Rs. 15,000 Rs. 110
Salary equal to Rs. 15,001 and Rs. 25,000 Rs. 130
Salary equal to Rs. 25,001 and Rs. 40,000 Rs.150
Salary equal to Rs. 40,001 and above Rs. 200

Other Rules

In the state of Punjab, development Tax has been recommended, and is pertinent to all income taxpayers at a standard rate of Rs. 200 every month

Union Territories and states where professional tax isn’t applicable
  • Arunachal Pradesh
  • Andaman & Nicobar
  • Chandigarh
  • Chhattisgarh
  • Dadra and Nagar Havelli
  • Daman and Diu
  • Haryana
  • Jammu and Kashmir
  • Lakshadweep
  • Rajasthan
  • Uttaranchal
  • Uttar Pradesh
  • Delhi

In Dec-2004, Municipal Corporation of Delhi (MCD) tried to implement the professional tax on individuals working and residing in New Delhi. However, the scheme was overruled by the Standing Committee of the MCD, and as a result, no professional tax is levied in New Delhi

Professional Tax Exemptions

  • Any individual suffering from an everlasting physical disability (comprising blindness) dependent on provisions of professional tax of a particular state
  • Individual who is 65 years of age – subject to exemption offered by respective state (In Karnataka, the age for exemption is 60 years)
  • Guardian or parents of an individual who is suffering from mental ill-health, if the professional tax act makes available provision for the same
  • Parents or guardians of a child having a physical disability as quantified in clause (C) with-effect-from 1 October 1996, pertinent as per State provisions

Professional Tax and Non-Salaried Individuals

Professional tax is also applicable for individuals who are not working in an organisation, or don’t have an employer, however, are still earning an income from some other source. As per the guidelines of the Professions, Trades, Callings, and Employment Act 2000, all professional individuals receiving a monthly income above a certain threshold are legally responsible to pay tax. Freelance professionals are also required to register for depositing Professional tax

Rules of Professional Tax

  • The ‘certificate of enrolment’ must be obtained inside 30 days for the date of being eligible for professional tax
  • Foreign employees are not legally responsible to pay professional tax
  • A separate application should be submitted by each office of an organisation
  • An employer with a ‘certificate of enrolment’ can be fined if the professional tax is not deposited for their employees

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