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Introduction

Professional tax is a part of the direct taxes that are levied on the citizens of the country. Contrary to popular assumption, professional tax as the name suggests is not applicable only to self-employed professionals like doctors, chartered accountants, cost accountants, etc. It is levied on all taxpayers whether working with a private or a public organization or self employed.

In case of persons employed by an organization, the professional tax is deducted from the salary of the employee and is shown in the Form 16. In case of self employed persons, the professional tax has to be calculated as per the applicable rates and has to be paid as part of the ITR.

Overview of Professional Taxes in India

Professional tax although part of direct tax and levied on the income, it is not levied across all the states of the country. There are many states where the professional tax is not charged on either the professional as well as self-employed persons.

The Constitution of India empowers the parliament to enact tax laws with respect to the union list as per Article 246. The state is empowered to make laws with respect to concurrent and state lists. State governments are also empowered to make laws with respect to professional tax though being a tax on income under Article 276 of the Constitution of India which deals with tax on professions, trades, callings and employment. This implies that the State Governments can refuse the implementation of the professional tax or specify the amount to be charged as professional tax.

However, the maximum professional tax that can be levied by a state cannot exceed Rs. 2500. Professional tax is also included or allowed as a deduction as per the Income Tax Act, 1961.

Professional Tax Rates

Professional Tax as mentioned above, is applicable at varied rates based on the state’s discretion. There are also many states that do not levy professional tax on their citizens. Following is the list of such states and territories that do not levy professional tax as part of the direct taxes collected from the citizens.

  • Jammu & Kashmir
  • Punjab
  • Rajasthan
  • Himachal Pradesh
  • Arunachal Pradesh
  • Haryana
  • Uttar Pradesh
  • Uttarakhand
  • Goa
  • Delhi
  • Andaman and Nicobar Islands
  • Daman & Diu
  • Dadra and Nagar Haveli
  • Lakshadweep
  • Chandigarh

Apart from these states and territories, professional tax is applicable on all the other states. The rate of professional taxes differs from state to state based on their discretion. The rates vary based on various factors like the income levels or based on the gender of the employee, etc. Some of the examples of the state wise applicable rates of professional tax are mentioned below.

State

Income per Month

Tax Rate/Tax Amount (p.m.)

Andhra Pradesh

Less than Rs. 15,000

Nil

Rs. 15,000 to less than Rs. 20,000

Rs. 150

Rs. 20,000 and above

Rs. 200

Gujarat

Up to Rs. 5999

Nil

Rs. 6000 to Rs. 8999

Rs. 80

Rs. 9000 to Rs. 11999

Rs. 150

Rs 12000 and above

Rs. 200

Karnataka

Up to Rs. 15,000

Nil

Rs. 15,001 onwards

Rs. 200

Kerala (Half yearly income slabs and half yearly tax payment)

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.1000

Rs.1,25,000 onwards

Rs.1250

Maharashtra

Up to Rs. 7,500

Nil (for male)

Up to Rs. 10,000

Nil (for female)

From Rs. 7,500 to Rs. 10,000

Rs. 175 (for male)

Rs. 10,000 onwards

Rs. 200 for 11 months + Rs. 300 for 12th month

Telangana

Up to Rs. 15,000

Nil

Rs.15,001 to Rs.20,000

Rs. 150

Rs.20,001 onwards

Rs.200

Up to 5 years (For professionals such as legal practitioners, CA, architects, etc.)

Nil

Over 5 years (For professionals such as legal practitioners, CA, architects, etc.)

Rs. 2,500 (per annum)

West Bengal

Up to 10,000

Nil

10,001 to 15,000

Rs. 110

15,001 to 25,000

Rs. 130

25,001 to 40,000

Rs. 150

40,001 and above

Rs. 200

Professional Tax Eligibility - Who should pay?

Professional tax is levied on all citizens of the state (wherever applicable) whether they are self employed or are employed by any organization. The eligible persons that are subject to paying the professional tax as per the applicable rates of a state are the following persons.

  • Individual
  • Hindu Undivided Family (HUF)
  • Company/Firm/Co-operative Society/Association of persons or a body of individuals, whether incorporated or not

The tax is calculated on the annual taxable income of the eligible person. It can be paid either annually or on a monthly basis. Self-employed taxpayers are required to obtain a Certificate of Enrolment from prescribed authority of the respective state in the manner as prescribed under the applicable rules.

The applicable professional tax is usually deducted from the salary of the eligible person. In case of self employed persons, the professional tax can be paid offline or online by visiting the state government professional tax website.

Consequences of Not Paying Professional Tax

Professional tax like any other tax is mandatorily to be levied and paid as per the applicable rates of the state the citizen belongs to. In case a person fails to register for professional tax or provides wrong information while obtaining the enrollment certificate, such person is liable to pay a penalty for such offence.

The penalty that will be applicable varies as per the state rules but can be as high as three times the amount of tax applicable. In case of non-registration for professional tax, the penalty can be Rs.5 per day for each day of such offence. In case professional tax is paid after the applicable due date, the penalty for the same can be 10% of the applicable tax obligation.

How to pay professional tax?

The procedure for paying the professional tax is as per the state rules i.e. may vary from state to state. Eligible persons can pay this tax by visiting the state website for professional tax and they can use any of the following details to pay the professional tax.

  • Profession Tax Enrolment Number which is of 12 Digit (numeric) to pay the tax.
  • Tax Registration Number
  • Tax Government ID of 12 digit
  • Vat Number

Taxpayers can also check the status of the payment by logging in on the respective state’s website.

Exemptions from Professional Tax

Following persons are exempted from paying professional Tax.

  • Parent or guardian of a physically challenged or mentally retarded child.
  • A person suffering 40 percent or more of permanent physical disability or blindness.
  • An assessee having completed 65 years of age (for the state of Karnataka, it is 60 years)

These clauses are subject to state rules and may vary depending on the state’s discretion.

FAQs on Professional Tax

1. Is professional tax a mandatory tax?

​Yes. Professional tax is mandatorily applied on all salaried persons and non-salaried persons.

2. Does professional tax vary as per state rules?

Yes. The rates of professional tax can vary from state to state depending on their discretion.

3. What is the maximum rate of applicable professional tax?

The maximum rate of professional tax that can be levied by a state is Rs. 2500.

4. Is professional tax deductible as per IT Act?

Yes. Professional tax is deductible as per the Income Tax Act, 1961.

5. Can a person pay professional tax via online mode?

Yes. A person can pay the professional tax by visiting his/her state’s website for professional tax and registering there.

Professional Taxes In India - Customer Reviews

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22 Feb 2021

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