What are profession tax slabs in various Indian states?

Last Updated at: October 22, 2019

Any one earning an income from salary or a profession, such as chartered accountant, lawyer or doctor, must pay a profession tax. Not all states levy this tax — and even the ones that do have different rates (for example, see here) and methods of collection. As of 2016, the following states impose this levy in India: Karnataka, West Bengal, Andhra Pradesh, Telangana, Maharashtra, Tamil Nadu, Gujarat, Assam, Chhattisgarh, Kerala, Meghalaya, Orissa, Tripura and Madhya Pradesh. Business owners, working individuals, merchants and people carrying out various occupations comes under the purview of this tax.

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Limit on Profession Tax

Profession tax is levied based on slab rates depending on the Income of the Individual. This tax is just like Income Tax, except for the fact that Income Tax is collected by the Central Government, and Profession Tax is collected by State Government. When first introduced in India, the maximum limit on the tax to be collected was Rs. 250. However, this limit was raised from Rs. 250 to Rs. 2500 in 1988.

Allowed as Deduction

Any amount paid as Profession Tax to the state government is allowed as a deduction under Section 16 of the Income Tax Act and Income Tax on the Balance Amount is levied as per the Income Tax Slab Rates. In case of salaried and wage earners, the profession tax is liable to be deducted by the employer from the salary/wages and the employer is liable to deposit the same with the state government. In case of other class of Individuals, this tax is liable to be paid by the person himself. Profession Tax in India is collected by some state governments themselves while in several other states which have active Panchayats, the local bodies themselves levy this tax. Every person liable to pay this tax shall apply for Profession Tax Registration in the prescribed form with the prescribed authority. As the states have been empowered to levy and collect this Tax, different states levy Profession Tax as per different slab rates. The Profession Tax slab rates in some of the major states in India are given below: Maharashtra: For monthly salary less than Rs. 7500, there is no tax. From Rs. 7501 to Rs.10,000, the amount is Rs. 175 per month. For Rs. 10,001 and above, it is Rs. 200 per month except February (when it is Rs.300). Karnataka: No tax for less than Rs. 15,000 per month and Rs. 200 for Rs. 15,000 and more. West Bengal: For less than Rs. 8500, no tax. For Rs. 4001 and above, Rs. 200 per month. Tamil Nadu: For less than Rs. 3500, no tax. For Rs. 12,501 and more, Rs. 182.5 per month.

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