Since it is included on their payslips/form 16, many salaried employees are likely to be familiar with the term ‘professional tax.’ However, they may or may not understand what it is and why it appears on their payslips/form 16 as a deduction from their salary income.

As a result, the goal of this website is to explain what “Professional Tax” is, why it is deducted, and whether it is entirely borne by the salaried class.

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What is professional tax?

Professional tax, like the name suggests, is a tax imposed primarily on professions. It’s a direct tax and is placed on various professions, trades, and vocations, and it’s computed based on the revenue generated by those professions, trades, and occupations.

Employees, self-employed individuals, freelancers, professionals, and those earning more than the monetary amount are all subject to it.

Only the Parliament has the ability to make laws relating to the union list, which includes income taxes, according to article 246 of the Indian Constitution. Only the concurrent and state lists grant the state legislative authority.

The state government levies a sort of income tax known as professional tax (not all states in the country choose to levy professional tax). Despite the fact that it is an income tax, the state government has the authority to enact professional tax laws under article 276 of the Indian Constitution, which governs taxes on professions, trades, callings, and employment.

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For the Income Tax Act of 1961, professional tax is an amount that can be deducted from taxable income.

Unlike income tax, which is levied by the central government, in India, professional tax is levied by the states or union territories. A professional tax is levied in the majority of Indian states, but not all. While some states have a professional tax, such as Karnataka and Maharashtra, Delhi and Haryana, some do not.

Self-employed people who work for themselves and are liable to the professional tax must pay the tax to the state government. The nodal organization for collecting professional tax on the basis of tax slabs that differ by state and union territory is the commercial taxes department of that state or union territory.

The tax is based on an individual’s annual taxable income; however, it can be paid annually or monthly. Self-employed taxpayers must obtain a certificate of enrolment from the appropriate authority in the prescribed manner (of the concerned state).

However, in the case of salaried employees and wage earners, the employer is required to deduct and deposit professional tax from the employee’s remuneration on a monthly basis (as per the applicable professional tax slab).

The employer must get a certificate of registration from the appropriate government in order to deposit the deducted professional tax.

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Different professional tax slabs 

It varies from state to state because it is a state-imposed tax. Professional tax is deducted according to the slabs established by each state and union territory. With the exception of the one paid in February, which is greater than the others, the yearly professional tax due is divided into 12 equal monthly payments.

It’s feasible that different types of income from different industries will be taxed differently. Here are the tax slabs for India’s many states and union territories:.

Professional tax in Maharashtra

Monthly salary (in Rs.)Tax (in Rs. per month)
Up to Rs.7,500 for menNil
Up to Rs.10,000 for womenNil
Rs.7,501 to Rs.10,000Rs.175
Rs.10,000 and aboveRs.200 for 12 months; Rs.300 for the last month

Professional tax in Karnataka

Monthly salary (in Rs.)Tax (in Rs. Per month)
Up to Rs.14,999Nil
More than 15,000Rs.200

Professional tax in West Bengal

Monthly salary (in Rs.)Tax (in Rs. Per month)
Up to Rs.10,000Nil
Rs. 10,001 to Rs.15,000Rs. 110
Rs. 15,001 to Rs.25,000Rs. 130
Rs. 25,001 to Rs.40,000Rs. 150
More than Rs.40,000Rs. 200

Professional tax in Madhya Pradesh

Monthly salary (in Rs.)Tax (in Rs. Per month)
Up to Rs. 18,750Nil
Rs. 18,751 to Rs. 25,000Rs. 125
Rs. 25,001 to Rs. 33,333Rs. 167
Rs. 33,334 and aboveRs. 208 for 11 months; Rs. 212 for the last month

Professional tax in Tamil Nadu

Monthly salary (in Rs.)Tax (in Rs. Per month)
Up to Rs. 3,500Nil
Rs. 3,5001 to Rs. 5,000Rs. 22.5
Rs. 5,001 to Rs. 7,500Rs. 52.5
Rs. 7,501 to Rs. 10,000Rs. 115
Rs. 10,001 to Rs. 12,500Rs. 171
Above Rs. 12,500Rs. 208

Professional tax in Andhra Pradesh

Monthly salary (in Rs.)Tax (in Rs. Per month)
Up to Rs. 15,000Nil
Rs. 15,001 to Rs. 20,000Rs. 150
Above Rs. 20,000Rs. 200

Professional tax in Gujarat

Monthly salary (in Rs.)Tax (in Rs. Per month)
Up to Rs. 5,999Nil
Rs. 6,000 to Rs. 8,999Rs. 80
Rs. 9,000 to Rs. 11,999Rs. 150
Rs. 12,000 and aboveRs. 200

Professional tax in Odisha

Monthly salary (in Rs.)Tax (in Rs. Per month)
Up to Rs. 13,304Nil
Rs. 13,305 to Rs. 25,000Rs. 125
Rs. 25,001 and aboveRs. 200 for 12 months; Rs. 300 for the last month

How to calculate professional tax?

Predetermined slabs based on monthly or annual salaries are used to calculate professional tax. It’s normally Rs. 200 per month, as long as the total tax for the year doesn’t exceed Rs 2,500.

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To compute the professional tax, you must do the following:

  • Step 1: Determine whether the professional tax is applicable in the state where you live.
  • Step 2: If you answered yes, calculate the tax amount depending on your monthly income.
  • Step 3: Examine the tax rates for your pay bracket. This offers you an estimate of how much professional tax you can deduct each month.

Understanding the intricacies revolving around professional tax can be tricky, thus, you must consult a professional or turn to a reliable source for assistance. Ziploan is one of the most dependable websites for any finance-related solutions. For more guidance about professional tax, you can approach Ziploan.

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Frequently Asked Questions

How is professional tax calculated?

Professional Tax calculation is based on predetermined slabs and on the basis of the salary or monthly income levels.

What is a professional tax in income tax?

Professional tax can be defined as a tax that is levied by a state government on all individuals who earn a living through any medium. This must not be confused with the definition of other professionals such as doctors or lawyers. This is a type of tax that needs to be paid by each and every individual earning income.

Can we claim a refund of professional tax?

Professional tax is paid at the end of the month presuming that you have carried out the profession in that month. Therefore once a professional tax is paid, there can be no refund. There is generally no refund mechanism under the professional tax.

Who qualifies for professional tax?

A person earning an income from salary or anyone practicing a profession such as chartered accountant, company secretary, lawyer, doctor, etc. are required to pay this professional tax. Different states have different rates and methods of collection. In India, professional tax is imposed every month.

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