What is Professional Tax | Calculation | Deduction & Tax Rates

Professional Tax Online Payment | Professional Tax Calculator | Professional Tax Rates | Professional Tax Regulation Penalty

Professional tax is a type of direct tax that is levied on those who earn money from their jobs, professions, or trading. A lawyer, teacher, doctor, chartered accountant, and other practicing professionals are examples of practicing professionals. Employers deduct the tax from the employee’s monthly salary, which is then deposited with the state governments. Apart from salaried employees, professionals pay it directly to the government.

What is Professional Tax

The term “professional tax” may be one of those that does not entirely reflect the true meaning of the term. It is not, according to its name, a tax imposed solely on professionals. It’s a tax placed on all kinds of professions, trades, and employment, and it’s based on the income generated by those professions, trades, and jobs. It is imposed on employees, self-employed individuals, freelancers, professionals, and those who earn more than the monetary level.

According to Article 246 of the Indian Constitution, only Parliament has the authority to create laws relating to the Union List, which includes income taxes. Only the Concurrent and State lists give the state the authority to enact legislation. Professional tax is a deductible payment under the Income Tax Act of 1961, and it can be deducted from taxable income. Professional tax, on the other hand, is a type of income tax levied by the state government (not all states in the country chose to levy professional tax). Despite being an income tax, the State Government is also entitled to pass legislation regarding professional tax under Article 276 of the Indian Constitution, which deals with taxes on professions, trades, callings, and employment.

Professional Tax Payment Procedure & Need to File Tax Return

This is an inquiry that is specific to a specific state. A professional tax, on the other hand, can be paid online or offline in most cases. Professional tax returns must also be filed at predetermined periods, depending on the requirements of the state.

In-Charge of Collecting & Paying Professional Tax

The Commercial Tax Department is in charge of collecting professional taxes. It is collected by the individual states’ commercial tax departments, and it eventually ends up in the municipal corporation’s treasury. Those who are accountable for paying professional taxes are:

An employer (corporations, partnership businesses, sole proprietorships, and so on) who is also a person carrying on a trade or profession is obligated to pay professional tax on that trade or profession, subject to any monetary thresholds set by the individual State’s legislation. To pay professional tax on his trade/profession and deduct the tax from his employees, the employer must register and get both a professional tax registration certificate and a professional tax enrolment certificate. Furthermore, depending on the legislation in each state, separate registration for each office may be required.

When it comes to employees, an employer is responsible for deducting and paying professional tax to the state government, subject to any monetary restrictions set by the state statute.

Tax Saving Rules

Professional Taxation in India

The state government levies a distinct kind of professional tax in each state. Article 276 of the Constitution, which authorizes the State Government to levy professional tax, establishes a maximum threshold of Rs 2,500 above which no professional tax can be levied All state has their own set of laws and regulations that govern the state’s professional tax. To pay this, however, all states use a slab system depending on income.

Examples:

Andhra Pradesh’s Professional Tax Rate

• If the monthly salary or wage in Andhra Pradesh’sup to Rs 15,000  then Andhra Pradesh’sprofessional tax rate will be NIL.
• If the monthly salary or wage in Andhra Pradesh is between Rs 15,001 to Rs 20,000 then Andhra Pradesh’sprofessional tax rate will be Rs 150 per month.
• If the monthly salary or wage in Andhra Pradesh is greater than Rs 20,000            then Andhra Pradesh’sprofessional tax rate will be Rs 200 per month.

Income Tax Slabs

Karnataka’s Professional Tax Rate

• If the monthly salary or wage in Karnataka is up to Rs 15,000 then Karnataka’s professional tax rate will be NIL.
• If the monthly salary or wage in Karnataka is greater than Rs 15,000 then Karnataka’s professional tax rate will be Rs 200 per month.

States where Professional Tax Rate is Applicable

The list of states where the it rate is applicable is given in the table below:

	State	Period of deduction	Income slabs	Tax amount
	Andhra Pradesh	Monthly	Up to Rs 15,000	Nil
Rs 15,001 to Rs 20,000	Rs 150
More than Rs 20,000	Rs 200
	Assam	Monthly	Up to Rs 10,000	Nil
Rs 10,001 to Rs 15,000	Rs 150
Rs 15,001 to Rs 25,000	Rs 180
More than Rs 25,000	Rs 208
	Bihar	Yearly	Up to Rs 3 lakh	Nil
Between Rs 3 lakh to Rs 5 lakh	Rs 1,000
Between Rs 5 lakh to Rs 10 lakh	Rs 2,000
Above Rs 10 lakh	Rs 2,500
	Jharkhand	Yearly	Up to Rs 3 lakh	Nil
Between Rs 3 lakh to Rs 5 lakh	Rs 1,200
Between Rs 5 lakh to Rs 8 lakh	Rs 1,800
Between Rs 8 lakh to Rs 10 lakh	Rs 2,100
Above Rs 10 lakh	Rs 2,500
	Gujarat	Monthly	Up to Rs 5999	Nil
Rs 6000 to Rs 8999	Rs 80
Rs 9000 to Rs 11999	Rs 150
More than Rs 12000	Rs 200
	Karnataka	Monthly	Up to Rs 15,000	Nil
Above Rs 15,000	Rs 200
	Kerala	Half-yearly	Up to Rs 11,999	Nil
Rs 12,000 to Rs 17,999	Rs 120
Rs 18,000 to Rs 29,999	Rs 180
Rs 30,000 to Rs 44,999	Rs 300
Rs 45,000 to Rs 59,999	Rs 450
Rs 60,000 to Rs 74,999	Rs 600
Rs 75,000 to Rs 99,999	Rs 750
Rs 1,00,000 to Rs 1,24,999	Rs 1,000
Above Rs 1,25,000	Rs 1,250
	Madhya Pradesh	Monthly	Up to Rs 2,25,000	Nil
Between Rs 2,25,001 to Rs 3,00,000	Rs 1,500 (Rs 125 Per Month)
Between Rs 3,00,001 to Rs 4,00,000	Rs 2,000 (Rs 166 Per Month For 11 Months And Rs 174 For 12th Month)
Above Rs 4,00,001	Rs 2,500 (Rs 208 Per Month For 11 Months And Rs 212 For 12th Month)
	Maharashtra	Monthly	Up to Rs 7,500	Nil
Between Rs 7,501 to Rs 10,000	Rs 175 (Nil for women)
Above Rs 10,000	Rs 200
Rs 300 (Employer has to deduct in the February month only)
	Manipur	Yearly	Up to Rs 50,000	Nil
Rs 50,000 onwards to Rs 75,000	Rs 1,200
Rs 75,000 onwards to Rs 1,00,000	Rs 2,000
Rs 1,00,000 onwards to Rs 1,25,000	Rs 2,400
Above Rs 1,25,000	Rs 2,500
	Meghalaya	Yearly	Up to Rs 50,000	Nil
Between Rs 50,001 to Rs 75,000	Rs 200
Between Rs 75,001 to Rs 1,00,000	Rs 300
Between Rs 1,00,001 to Rs 1,50,000	Rs 500
Between Rs 1,50,001 to Rs 2,00,000	Rs 750
Between Rs 2,00,001 to Rs 2,50,000	Rs 1,000
Between Rs 2,50,001 to Rs 3,00,000	Rs 1,250
Between Rs 3,00,001 to Rs 3,50,000	Rs 1,500
Between Rs 3,50,001 to Rs 4,00,000	Rs 1,800
Between Rs 4,00,001 to Rs 4,50,000	Rs 2,100
Between Rs 4,50,001 to Rs 5,00,000	Rs 2,400
Above Rs 5,00,001	Rs 2,500
	Mizoram	Monthly	Up toRs 5,000	Nil
Between Rs 5,001 to Rs 8,000	Rs 75 (Assessee may pay in lump sum Rs 900 per annum)
Between Rs 8,001 to Rs 10,000	Rs 120 (Assessee may pay in lump sum Rs 1440 per annum)
Between Rs 10,001 to Rs 12,000	Rs 150 (Assessee may pay in lump sum Rs 1800 per annum)
Between Rs 12,001 to Rs 15,000	Rs 180 (Assessee may pay in lump sum Rs 2160 per annum)
Above Rs 15,001	Rs 208 (Assessee may pay in lump sum Rs 2500 per annum)
	Nagaland	Monthly	Up to Rs 4,000	Nil
Between Rs 4,001 to Rs 5,000	Rs 35
Between Rs 5,001 to Rs 7,000	Rs 75
Between Rs 7,001 to Rs 9,000	Rs 110
Between Rs 9,001 to Rs 12,000	Rs 180
Above Rs 12,001	Rs 208
	Odisha	Yearly	Up to Rs 1,60,000	Nil
Between Rs 1,60,001 to Rs 3,00,000	Rs 1,500
Above Rs 3,00,001	Rs 2,500
	Puducherry	Yearly	Up to Rs 99,999	Nil
Between Rs 1,00,000 to Rs 2,00,000	Rs 250
Between Rs 2,00,001 to Rs 3,00,000	Rs 500
Between Rs 3,00,001 to Rs 4,00,000	Rs 750
Between Rs 4,00,001 to Rs 5,00,000	Rs 1,000
Above Rs 5,00,001	Rs 1,250
	Punjab	Monthly	Above Rs 2,50,000	Rs 200
	Sikkim	Monthly	Up to Rs 20,000	Nil
Between Rs 20,001 to Rs 30,000	Rs 125
Between Rs 30,001 to Rs 40,000	Rs 150
Above Rs 40,000	Rs 200
	Tamil Nadu	Monthly	Up to Rs 21,000	Nil
Between Rs 21,001 to Rs 30,000	Rs 135
Between Rs 30,000 to Rs 45,000	Rs 315
Between Rs 45,001 to Rs 60,000	Rs 690
Between Rs 60,001 to Rs 75,000	Rs 1,025
Above Rs 75,000	Rs 1,250
	Telangana	Monthly	Up to Rs 15,000	Nil
Between Rs 15,001 to Rs 20,000	Rs 150
Above Rs 20,001	Rs 200
	Tripura	Yearly	Up to Rs 7,500	Nil
Between Rs 7,501 to Rs 15,000	Rs 1,800
Above Rs 15,001	Rs 2,496
	West Bengal	Monthly	Up to Rs 10,000	Nil
Between Rs 10,001 to Rs 15,000	Rs 110
Between Rs 15,001 to Rs 25,000	Rs 130
Between Rs 25,001 to Rs 40,000	Rs 150
Above Rs 40,000	Rs 200

ITR e-filing 2.0 Portal

States where Professional Tax Rate is Not Applicable

S. No	State
1	Arunachal Pradesh
2	Delhi
3	Himachal Pradesh
4	Uttar Pradesh
5	Andaman and Nicobar Islands
6	Punjab
7	Uttarakhand
8	Goa
9	Jammu & Kashmir
10	Ladakh
11	Rajasthan
12	Haryana
13	Dadra and Nagar Haveli
14	Lakshadweep

Professional Tax Regulation Penalty

While the actual amount of penalty or penal interest may depend on the respective State’s legislation, a penalty may be levied by all such states for not registering once professional tax o77 legislation becomes applicable. Moreover, there are also penalties for not making the payment within the due date and also failing to file the return within the specified due date.

Example:

In Maharashtra, a penalty of Rs 5 per day is applied for late registration, the interest of 1.25 percent per month for late payment, a penalty of 10% of the amount of tax in case of late/non-payment of professional tax, and a penalty of Rs 1000 – Rs 2000 for late submission of the return.

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