What is the Act?
The professional tax is statutory complinace requirement.
This Tax is levied based on slab rates depending on the Income of the Individual. This Tax is just like Income Tax except for the fact that Income Tax is collected by the Central Govt and Professional Tax is collected by the State Government.
Brief history : This form of tax was first levied in India in the year 1949 and the power to levy Professional Tax has been given to the States by way of Clause (2) of Article 276 of the Constitution of India.When this tax was first introduced in India, the maximum limit on the tax to be collected was Rs. 250. However, this limit was raised from Rs. 250 to Rs. 2500 in the year 1988.
For the past few years, State Governments have been requesting the Parliament to raise this ceiling from Rs. 2500 to Rs. 7500. However, their request has not been accepted and the maximum amount of Professional Tax that can be levied by any State is Rs. 2,500 only.
Not all Indian states impose professional tax. Also, the tax applicable to different income slabs may vary from one state to another, but it has a maximum limit of Rs 2,500 per year.
Any amount paid as Professional Tax to the State Govt. is allowed as a deduction under Section 16 of the Income Tax Act and Income Tax on the Balance Amount is levied as per the Income Tax Slab Rates in force.
About the Act
Professional tax is a direct tax that applies to individuals earning an income by way of employment, practising their profession or trading. A practising professional includes a lawyer, teacher, doctor, chartered accountant, etc.
The tax is deducted from the individual’s monthly salary by their employer and is deposited to the state governments. Professionals apart from salaried employees pay it directly to the government.
Such professionals can claim a tax deduction for the PT paid during the financial year as per the Income Tax Act 1961.
Professional tax is a tax on income charged by the State Government.
The maximum limit of professional tax which can be levied on a person in a financial year is ₹ 2,500.
Not all States and Union Territories charge P Tax, like; Haryana, Delhi, Uttar Pradesh, Rajasthan, etc.
The slab of Professional Tax is different for each State which charges the tax.
There are penalties imposed for late payment of tax, late filing of return and non-registration under the professional tax.
For employees, the professional tax is deducted and submitted by the employer.
An employer, whether company/partnership/sole proprietor is required to get a Professional Tax Registration Certificate as well as the Professional Tax Enrollment Certificate.
- 16 states are included out of the 37 states and UT’s.
- For state wise applicability, refer the state wise sheet.
- Employees who get less then 3500/- wage
Non Application Status
- Arunachal Pradesh
- Daman & Diu
- Himachal Pradesh
- Uttar Pradesh
Parents of children with permanent disability or mental disability.
Members of the forces as defined in the Army Act, 1950, the Air Force Act, 1950 and the Navy Act, 1957 including members of auxiliary forces or reservists, serving in the state.
Badli workers in the textile industry.
An individual suffering from a permanent physical disability (including blindness).
Women exclusively engaged as agent under the Mahila Pradhan Kshetriya Bachat Yojana or Director of Small Savings.
Parents or guardians of individuals suffering from mental disability.
Individuals, above 65 years of age.