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.
Want to know more on Tax Planning? We at IndianMoney.com will make it easy for you. Just give us a missed call on 022 6181 6111 to explore our unique Free Advisory Service. IndianMoney.com is not a seller of any financial products. We only provide FREE financial advice/education to ensure that you are not misguided while buying any kind of financial products.
You May Also Watch:
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.
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:
|
Gross Monthly Salary (Rs) |
Tax per Month (Rs) |
|
Up to 15,000 |
Nil |
|
Above 15,000 |
200 |
|
Gross Monthly Salary (Rs) |
Tax per Month (Rs) |
|
Up to 15,000 |
Nil |
|
15,001 to 20,000 |
150 |
|
Above 20,000 |
200 |
|
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 |
|
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 |
|
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 |
|
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) |
|
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 |
|
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 |
|
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 |
|
Gross Monthly Salary (Rs) |
Tax per Month (Rs) |
|
Up to 15,000 |
Nil |
|
15,001 to 20,000 |
150 |
|
Above 20,000 |
200 |
|
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 |
|
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) |
|
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 |
|
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) |
|
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) |
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.
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.
Keep your Financial Cognizance up to date with IndianMoney App. Download NOW for simple tips & solutions for your financial wellbeing.
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.
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.
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:
Be Wise, Get Rich.
The research team at IndianMoney.com comprises of certified and experienced professionals who share the company's vision to make every Indian financially literate by equipping every Indian with right and unbiased advice. IndianMoney.com research team provides newsletters, articles, videos and FAQs on various financial products and concepts only to help you make wise financial decisions.
Subscribe to our Youtube Channel
This is to inform that Suvision Holdings Pvt Ltd ("IndianMoney.com") do not charge any fees/security deposit/advances towards outsourcing any of its activities. All stake holders are cautioned against any such fraud.
No. 50, Vinay Arcade, K H Road,
Shantinagar, Bengaluru,
India, 560027.
