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:

stateIncome per monthTax rate / tax amount (per month) 
Andra Pradesh15,000 Less thanZero
Rs 15000 20,000 to Rs. tillRs 150
20,000 And more than that200 rupees
Gujarat5,999 ToZero
6000 8999 to Rs. tillRs 80
Rs 9000 11999 to Rs. tillRs 150
Rs 12000 And more than that200 rupees
Karnataka15,000 ToZero
Rs 15,001 From200 rupees
Bitter gourd (half yearly income slab and half yearly tax paid)11,999 ToZero
Rs 12,000 17,999 to Rs. till120 rupees
Rs 18,000 29,999 to Rs. tillRs 180
Rs 30,000 44,999 to Rs. tillRs 300
Rs 45,000 From Rs. 59,999 tillRs 450
Rs 60,000 74,999 to Rs. tillRs 600
75,000 Rs. 99,999 to Rs. tillRs 750
Rs 1,00,000 1,24,999 from Rs. tillRs 1000
1,25,000 Rs. FromRs 1250
Maharashtra7,500 ToZero (for men)
10,000 ToZero (for women)
Rs 7,500 10,000 to Rs. tillRs 175 (For men)
Rs 10,000 More than200 for 11 months Rs. + Rs 300 for the 12th month.
Telangana15,000 ToZero
Rs 15,001 20,000 to Rs. tillRs 150
20,0001 Rs. More than200 rupees
Up to 5 years (professionals eg legal practitioner, CA, Architect etc.)Zero
After 5 years (professionals eg legal practitioner, CA, Architect, etc.)2,500 (Per month)
West Bengal10,000 ToZero
10,001 Rs. 15,000 to Rs. tillRs 110
Rs 15,001 25,000 to Rs. tillRs 130
Rs 25,001 40,000 to Rs. tillRs 150
40,001 and above200 rupees
professional tax table

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
See also  Income Tax Return filing Keep in mind while filing returns

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

What is professional tax?

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.

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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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