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May 2017

What is Professional Tax

Professional tax is the tax by the state governments in India. Anyone 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 at the state level. However, not all states impose this tax. The states which impose professional tax are Karnataka, Bihar, West Bengal, Andhra Pradesh, Telangana, Maharashtra, Tamil Nadu, Gujarat, Assam, [[]], Kerala, Meghalaya, Odisha, Tripura, Madhya Pradesh, and Sikkim. Business owners, working individuals, merchants and people carrying out various occupations comes under the purview of this tax.

Professional tax is levied by particular Municipal Corporations and majority of the Indian states impose this duty. It is a source of revenue for the government. The maximum amount payable per year is INR 2,500 and in line with tax payer’s salary, there are predetermined slabs. It is also payable by members of staff employed in private companies. It is deduced by the employer every month and sent to the Municipal Corporation. It is a mandatory to pay professional tax. The tax payer is eligible for income tax deduction for this payment.[1]

Applicability of Professional Tax as per the Constitution of India: Article 276 of the Constitution of India provides that “there shall be levied and collected a tax on professions, trades, callings and employments, in accordance with the provisions of this Act. Every person engaged in any profession, trade, calling or employment and falling under one or the other of the classes mentioned in the second column of the Schedule shall be liable to pay to the State Government tax at the rate mentioned against the class of such persons in the third column of the said Schedule. Provided that entry 23 in the Schedule shall apply only to such classes of persons as may be specified by the State Government by notification from time to time.

Description


Professional Tax is the tax by the state governments in India. Anyone earning an income from salary or anyone practicing a profession such as chartered accountant, 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 at the state level. However, not all states impose this tax. The states which impose professional tax are Karnataka, West Bengal, Andhra Pradesh, Telangana, Maharashtra, Tamil Nadu, Gujarat, Assam, Chhattisgarh, Kerala, Meghalaya, Odisha, Tri pura, Madhya Pradesh, Bihar, Jharkhand, Jammu & Kashmir, Manipur, Nagaland, Uttar Pradesh and Sikkim. Business owners, working individuals, merchants and people carrying out various occupations comes under the purview of this tax

Article 276 in Constitution of India, 1949


  • Notwithstanding until provisions to the contrary is made by Parliament by law, and any law so made by Parliament may be made either generally or in relation to any specified States, municipalities, boards or authorities
  • The power of the Legislature of a State to make laws as aforesaid with respect to taxes on professions, trades, callings and employments shall not be construed as limiting in any way the power of Parliament to make laws with respect to taxes on income accruing from or arising out of professions, trades, callings and employments

Amount


The professional tax is a slab-amount based on the gross income of the professional and salaried employee’s. It is deducted from salary of the employee every month. In case of a company, directors of a company, partnership’s, individual partners, self employed professional or owner’s of any business undertaken in the state, it is to be submitted depending upon there gross turnover in the preceding year. In some cases the payment of tax is fixed and is to be paid irrespective of turnover. For example in state of west bengal, owner of a factory has to pay professional tax only if the preceding year turnover is greater than 5 lac rupees and in case of companies there is a mandatory payment of rupees 2,500 /- each year as professional tax irrespective of turnover

Professional Tax Slabs in Various States:


Since each state tends to have its own slab for professional taxes, here are the slabs for various states and union territories in India.

Professional Tax in Maharashtra:

Monthly salary (in Rs.) Tax (in Rs. Per month)
Up to 7,500 for men Nil
Up to 10,000 for women Nil
7,500 to 10,000 175
10,000 and above 200 (except February when its 300)

Professional Tax in Karnataka:

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

Professional Tax in West Bengal:

Monthly salary (in Rs.) Tax (in Rs. Per month)
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
More than 40,000 200

Professional Tax in Madhya Pradesh:

Annual salary (in Rs.) Tax (in Rs. Per month)
Up to 1.5 lakhs Nil
1.5 lakhs to 1.8 lakhs 125
1.8 lakhs and above 212


Professional Tax in Tamil Nadu:

Half yearly salary (in Rs.)Tax (in Rs. Per 6 month)

Up to 21,000 Nil
21,001 to 30,000 100
30,001 to 45,000 235
40,001 to 60,000 510
60,001 to 75,000 760
75,001 and above 1095

Professional Tax in Andhra Pradesh:

Monthly salary (in Rs.)Tax (in Rs. Per month)

Up to 15,000 Nil
15,001 to 20,000 150
Above 20,000 200


Professional Tax in Gujarat:

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


Professional Tax in Odisha:

Monthly salary (in Rs.) Tax (in Rs. Per month)
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
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