Professional Tax in India

What is professional tax?

Professional tax is levied by state governments at different slab rates, subject to the assessee’s level of income. It is levied on individuals who are involved in any profession, trade, calling, or employment. Individuals who are working in government, private, and non-government organizations (NGOs) are all assesses to this tax. The maximum amount of professional tax that can be charged in India is Rs 2,500 a year. Professional Tax is levied as per Article 276, Clause 2 of the Constitution of India, which specifies the maximum limit, and state governments cannot charge more than Rs 2,500 tax a year. Persons who have attained the age of 65 need not pay professional tax. No tax is payable on holding any profession for less than 120 days in that year.

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Professional Tax in India

Who is Liable to Pay Professional Tax?

Article 276, Clause 2 of the Constitution of India specifies that professional tax shall be imposed on professions, trade, callings, and employments. It also says that any individual who earns his income from these sources shall be a party to this tax and shall be liable to pay tax to the State Government at a pre announced rate. Professional tax has a slab based structure and is based on the income of the person. It is deducted each month from the salary of the individual.

If the individual is a director or partner of a company, tax is deducted after gross turnover of the company is calculated, so that the employee’s annual earning is clear. The employer is responsible to collect professional tax from the employees’ salaries and pay it to the state government. If an individual is self-employed or a freelancer, he must pay the tax himself.

Professional Tax on Salary

It is easy to calculate professional tax liability based on gross income and tax slab prescribed by the state government. The slab rates differ across states. Currently, only 15 states levy professional tax.

Professional Tax slab rates in different states are given below:

Professional Tax Slabs in Karnataka

Gross Monthly Salary (Rs)	Tax per Month (Rs)
Up to 15,000	Nil
Above 15,000	200

Professional Tax Slabs in Telangana

Gross Monthly Salary (Rs)	Tax per Month (Rs)
Up to 15,000	Nil
15,001 to 20,000	150
Above 20,000	200

Professional Tax Slabs in Tamil Nadu

Half Yearly Salary (Rs)	Tax per 6 Months (Rs)
Up to 21,000	Nil
21,001 to 30,000	100
30,001 to 45,000	235
45,001 to 60,000	510
60,001 to 75,000	760
Above 75,000	1,095

Professional Tax Slabs in West Bengal

Gross Monthly Salary (Rs)	Tax per Month (Rs)
Up to 8,500	Nil
8,501 to 10,000	90
10,001 to 15,000	110
15,001 to 25,000	130
25,001 to 40,000	150
Above 40,000	200

Professional Tax Slabs in Gujarat

Gross Monthly Salary (Rs)	Tax per Month (Rs)
Up to 5,999	Nil
6,000 to 8,999	80
9,000 to 11,999	150
12,000 and above	200

Professional Tax Slabs in Maharashtra

Gross Monthly Salary (Rs)	Tax per Month (Rs)
Up to 7,500 (for men)	Nil
Up to 10,000 (for women)	Nil
7,500 to 10,000 (for men)	175
Above 10,000	200 (300 for February)

Professional Tax Slabs in Odisha

Gross Monthly Salary (Rs)	Tax per Month (Rs)
Up to 5,000	Nil
5,001 to 6,000	30
6,001 to 8,000	50
8,001 to 10,000	75
10,001 to 15,000	100
15,001 to 20,000	150
Above 20,000	200

Professional Tax Slabs in Chhattisgarh

Gross Annual Salary (Rs)	Tax per Month (Rs)
Up to 1,50,000	Nil
1,50,001 to 2,00,000	150
2,00,001 to 2,50,000	180
2,50,001 to 3,00,000	190
Above 3,00,000	200

Professional Tax Slabs in Madhya Pradesh

Gross Annual Salary (Rs)	Tax per Month (Rs)
Up to 1,50,000	Nil
1,50,001 to 1,80,000	125
Above 1,80,000	212

Professional Tax Slabs in Andhra Pradesh

Gross Monthly Salary (Rs)	Tax per Month (Rs)
Up to 15,000	Nil
15,001 to 20,000	150
Above 20,000	200

Professional Tax Slabs in Bihar

Gross Annual Salary (Rs)	Year
Up to 3,00,000	Nil
3,00,001 to 5,00,000	1,000
5,00,001 to 10,00,000	2,000
Above 10,00,000	2,500

Professional Tax Slabs in Assam

Gross Monthly Salary (Rs)	Tax per Month (Rs)
Up to 10,000	Nil
10,001 to 15,000	150
15,001 to 25,000	180
Above 25,000	208 (212 for February)

Professional Tax Slabs in Sikkim

Gross Monthly Salary (Rs)	Tax per Month (Rs)
Up to 20,000	Nil
20,001 to 30,000	125
30,001 to 40,000	150
Above 40,000	200

Professional Tax Slabs in Meghalaya

Gross Monthly Salary (Rs)	Tax per Month (Rs)
Up to 4,166	Nil
4,167 to 6,250	16.5
6,251 to 8,333	25
8,334 to 12,500	41.5
12,501 to 16,666	62.5
16,667 to 20,833	83.33
20,834 to 25,000	104.16
25,001 to 29,166	125
29,167 to 33,333	150
33,334 to 37,500	175
37,501 to 41,666	200
41,667 and Above	208 (212 for February)

Professional Tax Slabs in Tripura

Gross Monthly Salary (Rs)	Tax per Month (Rs)
Up to 5,000	Nil
5,001 to 7,000	70
7,001 to 9,000	120
9,001 to 12,000	140
12,001 to 15,000	190
Above 15,000	208 (212 for February)

How to Pay Professional Tax Online?

Professional tax Payers can pay professional tax online by visiting respective state website. The website allows tax payers to submit tax returns and make payments. The individual must enter personal, professional, and financial details. Taxpayers can generate Certificate of Tax Payments online, without having to contact the Professional Tax Office. Payment can be made on a monthly, quarterly, half-yearly, or annual basis.

Penalty for Late or Non Payment of Professional Tax

Every state imposes a penalty on anyone who fails to pay the professional tax or does not pay it on time and according to schedule. The actual amount of penalty differs from state to state. Penalty is also levied for non registering, once the professional tax becomes applicable. If the particular state requires filing of returns, failing to do so will attract a penalty.

In Karnataka, 1.25% is charged every month on late payment, and the maximum penalty is 50% of the total outstanding amount.

In Maharashtra, Rs 5/day is imposed for delay in registration, interest of 1.25% per month for late payment, penalty of 10% of tax amount in case of non-payment of professional tax. Rs 1,000 to 2,000 penalty is charged for failing to file returns.

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Who is responsible for collection and payment of Professional Tax?

Professional Tax is collected by the Commercial Tax Department of the respective states. It is deducted each month from the salary of the individual. In case the individual is a director or partner of a company, the gross income of the company is first calculated and only then is the tax liability of the director/partner computed. The employer is responsible for collecting professional tax from the employees’ salaries and then paying it to the state government. If an individual is self-employed or a freelancer, he must pay the tax himself. For the purpose of this tax, the definition of “Person” includes individuals, Hindu Undivided Family (HUF), Firm, Company, Corporation, Society, Club, or Association. Each branch of a firm, company, and corporation and so on is treated as a separate person. The employer must register and obtain a Certificate of Registration to pay Tax for himself, and an Enrolment Certificate to deduct and pay tax for his employees.

How to Pay Professional Tax Online? Professional Tax Registration and Tax Return?

The tax payment procedure is state specific and professional tax returns need to be filed as per state requirements. Professional tax Payers can pay their professional tax online by visiting their respective state websites. The website allows tax payers submit tax returns and make payments. The individual must enter personal, professional, and financial details. Taxpayers can generate Certificate of Tax Payment online, without having to contact the Professional Tax Office. Payment can be made on a monthly, quarterly, half-yearly, or annual basis.

Consequences of violation of professional tax regulation

Every state imposes a penalty on anyone who fails to pay the professional tax or does not pay it on time and according to schedule. The actual amount of penalty differs from state to state. Penalty is also levied for not registering, once the professional tax becomes applicable. If the particular state requires filing of returns, failing to do so will attract a penalty.

In Karnataka, the penalties are as follows:

• For non-registration in case of employer – Rs 1,000
• Non-registration in case of other persons – Rs 500
• Non-Filing of returns for employer – Rs 250
• For non-payment by enrolled person or employer –penalty with interest rate of 1.25% per month, and penalty not exceeding 50% of tax amount due.

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