What is professional tax?

What is professional tax?: Profession tax is an in-direct tax imposed on people who are either a professional, a jobber or a business tax. Income tax is levied by the Central Government but Profession Tax is levied by the State Government or the Union Territory Government. Most of the states of India are taxed professionally, but not all. States like Karnataka and Maharashtra levy profession tax, while no such tax is applicable in Delhi and Haryana.

Profession tax rates in major states of India

Because this tax is imposed by the state, it varies from state to state. While some states apply this tax as a percentage, some states apply the prescribed amount as this tax. The following are the rates of profession tax in major states of India:

Who is the Profession Tax applicable?

Profession tax applies to the following people:

1. person
2. A Hindu Undivided Family (HUF)
3. A company / firm / cooperative society / association of individuals or a body of individuals

Who pays profession tax?

Self-employed (people doing their own business) who run their own profession or business fall under the limit of this profession tax. They themselves have to pay this tax to the state government. The commercial tax department of any state / union territory is the nodal agency collects professional tax. This tax is dependent on the taxable income of the person for the year and can be paid annually or monthly. Tax payers have to get the enrollment certificate from the designated department (of that state).

However, in the case of a employed person, the company is required to deduct professional tax every month from the salary of the employee (according to whatever professional tax slab is applicable) and submit it to the government. For this, the company has to get a certificate of registration from the department concerned.

Maximum Profession Tax Amount

A maximum of Rs 2,500 in a financial year on any person. A professional tax of Rs.

Professional tax is deducted under section 16 ( iii) of the Income Tax Act.

According to section 16 (iii) of the Income Tax Act 1961, the professional tax that an employee pays can be deducted from his total salary.

Profession tax applicable in India

Major Indian states and union territories that implement profession tax

The following Indian states and union territories apply professional tax:

1. Andra Pradesh
2. Karnataka
3. Maharashtra
4. Tamil nadu
5. Assam
6. Kerala
7. Meghalaya
8. Tripura
9. Bihar
10. Jharkhand
11. Madhya Pradesh
12. West Bengal
13. Manipur
14. Mizoram
15. Odisha
16. Puducherry
17. Sikkim
18. Telangana
19. Nagaland *
20. Chhattisgarh
21. Gujarat

* According to the Nagaland Tax Department, professional tax is applicable in the state, but according to everyone else, no professional tax is applicable in Nagaland.

Major Indian states and union territories where no professional tax is levied

Following are some Indian states and Union Territories where professional tax is not applicable:

1. Arunachal Pradesh
2. Himachal Pradesh
3. Delhi
4. Haryana
5. Uttar Pradesh
6. Uttarakhand
7. Andaman and Nicobar Islands
8. Daman and Diu
9. Dadra and Nagar Haveli
10. Lakshadeep
11. Jammu and Kashmir
12. Punjab
13. Rajasthan
14. Chandigarh
15. Goa

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