What is the Professional tax? How is it Calculated?

Last Updated at: July 22, 2020
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What is the Professional tax_? How is it Calculated?

Unlike suggested by the term, professional tax calculated is not a tax levied on the professionals alone. This tax is levied on any individual who earns a livelihood through profession, employment, trade, or calling.

As per provisions mentioned in Clause (2), Article 276 of the Indian Constitution, the right to levy and collect professional tax is bestowed on the State Governments. Further, many Indian states have opted not to exercise this right as well.

How is the professional tax calculated?

In all the States where professional tax is applicable, it is charged based on the professional tax slab as enacted by the respective States. However, no state can levy professional tax beyond ₹ 2,500 on any taxpayer in a year. Additionally, professional tax payment is allowed as a deduction from taxable income as per the Income-tax Act, 1961. For the salaried employees, professional tax calculation in salary is done by the employer. Similarly, he entrusts with the responsibility of paying the tax to the concern department of the State Government.

The professional tax slab varies from one state to another. For illustration, we will have a look at the professional tax slab in Tamil Nadu.

Professional Tax Slab in Tamil Nadu for Financial Year 2020-21

Monthly salary (₹) Tax per month (₹)
Up to ₹ 3,500/- NIL
From ₹ 3,501 to ₹ 5,000/- ₹ 22.50/-
From ₹ 5,001 to ₹ 7,500/- ₹ 52.50/-
From ₹ 7,501 to ₹ 10,000/- ₹ 115/-
From ₹ 10,001 to ₹ 12,500/- ₹ 171/-
Above ₹ 12,501/- ₹ 208/-

 

* Collected every 6 months

Here, you can check the professional tax slab rates of various states. 

Get Professional Tax Registration

Procedure for professional tax registration and professional tax payment

As mentioned above, the right to levy and collect professional tax is bestowed on the State Governments. Additionally, we will make you understand the process of professional tax registration and professional tax payment for the state of Tamil Nadu.

In Tamil Nadu, you can register for and pay your professional tax both online and offline. Here, we will have a look at the procedure for registration and payment for the Greater Chennai Municipal Corporation –

  1. To apply for professional tax registration,  visit the online portal
  2. Further, after providing the details such as your email Id, mobile number, etc., you will get your username and password. These will carry to your mobile registration number and email.
  3. Additionally, with the credentials provided, log in to your account and fill up the self-assessment application 
  4. Upload the following documents while applying:
  • Certificate from the Registrar of Companies
  • Memorandum of Articles (In case of Limited Company)
  • Proof of Office establishment at Chennai (Mandatory)
  • Additionally, a certificate from the Commercial Tax Department
  • Further, employee and employer details (Mandatory)
  • Moreover, Bank A/c. Details /PAN Card details
  1. After uploading the documents click ‘submit’. Moreover, you do not require to pay any fee while submitting this application.  
  2. Additionally, the portal will generate an acknowledgement slip along with the profession tax Registration Number (PTNAN-Professional Tax New Account Number).
  3. Next, you can make the professional tax payment online by using your preferred mode of payment.

You need to pay the professional tax on time. Further, a penalty imposes on a taxpayer for failing to register for professional tax. Additionally, penal provisions are also there for non-payment of professional tax and for failing to file the return before the due date.

 Frequently asked questions

How is the professional tax calculated?

The professional tax is calculated on the professional tax slabs. These slabs vary from one state to another. However, no state can levy professional tax beyond ₹ 2,500 on any taxpayer in a year. Additionally, professional tax payment is deducted from taxable income as per the Income-tax Act, 1961. Moreover, for salaried employees, professional tax calculation and deduction is done by the concerned employer, as per the State norms.

What is the slab for professional tax?

In all the States where the professional tax is applicable, it charges based on professional tax slabs as enacted by the respective States. Moreover, professional tax rates and slabs vary from one state to another.

How is PT deducted from salary?

As per Article 276 (2) of the Indian Constitution, a maximum annual amount of Rs 2500 can be deducted from the salary of any individual. However, the professional tax remitted to the state and every state can fix its limit of monthly salary amount to levy the professional tax on. For example, the State of Karnataka charges no professional tax on a monthly salary up to Rs 15,000. Therefore, above this limit, a professional tax of Rs 200 per month charges on a salaried individual.

 

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What is the Professional tax? How is it Calculated?

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Unlike suggested by the term, professional tax calculated is not a tax levied on the professionals alone. This tax is levied on any individual who earns a livelihood through profession, employment, trade, or calling.

As per provisions mentioned in Clause (2), Article 276 of the Indian Constitution, the right to levy and collect professional tax is bestowed on the State Governments. Further, many Indian states have opted not to exercise this right as well.

How is the professional tax calculated?

In all the States where professional tax is applicable, it is charged based on the professional tax slab as enacted by the respective States. However, no state can levy professional tax beyond ₹ 2,500 on any taxpayer in a year. Additionally, professional tax payment is allowed as a deduction from taxable income as per the Income-tax Act, 1961. For the salaried employees, professional tax calculation in salary is done by the employer. Similarly, he entrusts with the responsibility of paying the tax to the concern department of the State Government.

The professional tax slab varies from one state to another. For illustration, we will have a look at the professional tax slab in Tamil Nadu.

Professional Tax Slab in Tamil Nadu for Financial Year 2020-21

Monthly salary (₹) Tax per month (₹)
Up to ₹ 3,500/- NIL
From ₹ 3,501 to ₹ 5,000/- ₹ 22.50/-
From ₹ 5,001 to ₹ 7,500/- ₹ 52.50/-
From ₹ 7,501 to ₹ 10,000/- ₹ 115/-
From ₹ 10,001 to ₹ 12,500/- ₹ 171/-
Above ₹ 12,501/- ₹ 208/-

 

* Collected every 6 months

Here, you can check the professional tax slab rates of various states. 

Get Professional Tax Registration

Procedure for professional tax registration and professional tax payment

As mentioned above, the right to levy and collect professional tax is bestowed on the State Governments. Additionally, we will make you understand the process of professional tax registration and professional tax payment for the state of Tamil Nadu.

In Tamil Nadu, you can register for and pay your professional tax both online and offline. Here, we will have a look at the procedure for registration and payment for the Greater Chennai Municipal Corporation –

  1. To apply for professional tax registration,  visit the online portal
  2. Further, after providing the details such as your email Id, mobile number, etc., you will get your username and password. These will carry to your mobile registration number and email.
  3. Additionally, with the credentials provided, log in to your account and fill up the self-assessment application 
  4. Upload the following documents while applying:
  • Certificate from the Registrar of Companies
  • Memorandum of Articles (In case of Limited Company)
  • Proof of Office establishment at Chennai (Mandatory)
  • Additionally, a certificate from the Commercial Tax Department
  • Further, employee and employer details (Mandatory)
  • Moreover, Bank A/c. Details /PAN Card details
  1. After uploading the documents click ‘submit’. Moreover, you do not require to pay any fee while submitting this application.  
  2. Additionally, the portal will generate an acknowledgement slip along with the profession tax Registration Number (PTNAN-Professional Tax New Account Number).
  3. Next, you can make the professional tax payment online by using your preferred mode of payment.

You need to pay the professional tax on time. Further, a penalty imposes on a taxpayer for failing to register for professional tax. Additionally, penal provisions are also there for non-payment of professional tax and for failing to file the return before the due date.

 Frequently asked questions

How is the professional tax calculated?

The professional tax is calculated on the professional tax slabs. These slabs vary from one state to another. However, no state can levy professional tax beyond ₹ 2,500 on any taxpayer in a year. Additionally, professional tax payment is deducted from taxable income as per the Income-tax Act, 1961. Moreover, for salaried employees, professional tax calculation and deduction is done by the concerned employer, as per the State norms.

What is the slab for professional tax?

In all the States where the professional tax is applicable, it charges based on professional tax slabs as enacted by the respective States. Moreover, professional tax rates and slabs vary from one state to another.

How is PT deducted from salary?

As per Article 276 (2) of the Indian Constitution, a maximum annual amount of Rs 2500 can be deducted from the salary of any individual. However, the professional tax remitted to the state and every state can fix its limit of monthly salary amount to levy the professional tax on. For example, the State of Karnataka charges no professional tax on a monthly salary up to Rs 15,000. Therefore, above this limit, a professional tax of Rs 200 per month charges on a salaried individual.

 

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