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:
|state||Income per month||Tax rate / tax amount (per month)|
|Andra Pradesh||15,000 Less than||Zero|
|Rs 15000 20,000 to Rs. till||Rs 150|
|20,000 And more than that||200 rupees|
|6000 8999 to Rs. till||Rs 80|
|Rs 9000 11999 to Rs. till||Rs 150|
|Rs 12000 And more than that||200 rupees|
|Rs 15,001 From||200 rupees|
|Bitter gourd (half yearly income slab and half yearly tax paid)||11,999 To||Zero|
|Rs 12,000 17,999 to Rs. till||120 rupees|
|Rs 18,000 29,999 to Rs. till||Rs 180|
|Rs 30,000 44,999 to Rs. till||Rs 300|
|Rs 45,000 From Rs. 59,999 till||Rs 450|
|Rs 60,000 74,999 to Rs. till||Rs 600|
|75,000 Rs. 99,999 to Rs. till||Rs 750|
|Rs 1,00,000 1,24,999 from Rs. till||Rs 1000|
|1,25,000 Rs. From||Rs 1250|
|Maharashtra||7,500 To||Zero (for men)|
|10,000 To||Zero (for women)|
|Rs 7,500 10,000 to Rs. till||Rs 175 (For men)|
|Rs 10,000 More than||200 for 11 months Rs. + Rs 300 for the 12th month.|
|Rs 15,001 20,000 to Rs. till||Rs 150|
|20,0001 Rs. More than||200 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 Bengal||10,000 To||Zero|
|10,001 Rs. 15,000 to Rs. till||Rs 110|
|Rs 15,001 25,000 to Rs. till||Rs 130|
|Rs 25,001 40,000 to Rs. till||Rs 150|
|40,001 and above||200 rupees|
Who is the Profession Tax applicable?
Profession tax applies to the following people:
- A Hindu Undivided Family (HUF)
- 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:
- Andra Pradesh
- Tamil nadu
- Madhya Pradesh
- West Bengal
- Nagaland *
* 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:
- Arunachal Pradesh
- Himachal Pradesh
- Uttar Pradesh
- Andaman and Nicobar Islands
- Daman and Diu
- Dadra and Nagar Haveli
- Jammu and Kashmir