Whenever an individual receives a salary from an organisation, he or she has to pay a certain amount as tax to their respective state government. This is called as profession tax. However, profession tax varies from state to state. In this article, you will learn about profession tax, the tax deduction criteria for various states in India
What Is a Profession Tax?
Profession tax is a type of direct tax imposed by state governments on individuals earning a salary or engaged in a profession, such as software development, law, or medicine. However, professional tax is not applicable in all states, and those that implement it have varying rates and collection methods. Lets have a look at profession tax slabs.
Profession Tax: Applicable States
The following states impose the professional tax levy in India:
- Karnataka
- Andhra Pradesh
- Chhattisgarh
- Telangana
- Tamil Nadu
- Gujarat
- Assam
- Kerala
- Maharashtra
- Meghalaya
- Odisha
- West Bengal
- Bihar
- Madhya Pradesh
- Jharkhand
- Tripura
- Sikkim
- Mizoram
Business owners, working individuals, merchants and people carrying out various occupations come under the purview of this tax.
Limit on Profession Tax
Profession tax is imposed at varying slab rates according to an individual’s income. Similar to income tax, the distinction lies in its collection, with the state government handling professional tax instead of the central government.
Initially set at ₹250 when first introduced in India, the maximum limit on the tax slab was later increased from ₹250 to ₹2500 in 1988.
Who Can Pay Profession Tax?
Professional tax is mandatory for salaried individuals on a monthly basis. However, those falling into the following categories are also required to fulfill their professional tax obligations:
- Individuals working as employees in an organization.
- Hindu Undivided Families (HUFs).
- Firms or companies, regardless of their incorporation status.
- Limited Liability Partnerships (LLPs).
Tax Deduction Criteria
Payments made as professional tax to the state government qualify for a deduction under Section 16 of the Income Tax Act. After deducting the professional tax, income tax is applied to the remaining amount based on the Income Tax Slab Rates.
For salaried and wage earners, the responsibility of professional tax deduction from salary/wages lies with the employer, who is then accountable for depositing the deducted amount with the state government.
Conversely, individuals from other classes are personally responsible for paying the tax.
The following states and union territories do not levy professional tax in India
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Professional Tax Rates and Slabs Across Different States
Various states in India administer and collect profession tax either independently or through local bodies, particularly in states with active Panchayats. Individuals obligated to pay this tax must submit an application for Profession Tax Registration using the designated form and authority.
Given that states possess the authority to impose and gather this tax, the rates vary across different regions. Here are the Profession Tax slab rates for some prominent states in India:
Professional tax slab in Karnataka
| Monthly salary up to ₹15,000 | NIL |
| Monthly salary greater than ₹15,000 | ₹200/month |
Professional tax slab in Andhra Pradesh
| Monthly salary up to ₹15,000 | NIL |
| Monthly salary between ₹15,000 & ₹20,000 | ₹150/month |
| Monthly salary greater than ₹20,000 | ₹200/month |
Professional Tax in Maharashtra
| Up to ₹7,500 (Men) | NIL |
| Up to ₹10,000 (Women) | NIL |
| ₹7,500- ₹10,000 | ₹175/month |
| Above ₹10,000 |
Normal months – ₹200/month February- ₹300 |
Professional Tax in West Bengal
| Up to ₹ 8,500 | NIL |
| ₹ 8,500-₹ 10,000 | ₹ 90/month |
| ₹ 10,000-₹ 15,000 | ₹ 110/month |
| ₹ 15,000-₹ 25,000 | ₹ 130/month |
| ₹ 25,000-₹ 40,000 | ₹ 150/month |
| Above ₹ 40,000 | ₹ 200/month |
Professional Tax in Madhya Pradesh
| Up to ₹ 1.5 Lakhs | NIL |
| ₹ 1.5 lakhs- ₹ 1.8 lakhs | ₹ 125/month |
| Above ₹ 1.8 lakhs | ₹ 212/month |
Professional Tax in Tamil Nadu
| Up to ₹ 21,000 | NIL |
| ₹ 21,000-₹ 30,000 | ₹ 100/month |
| ₹ 30,000-₹ 45,000 | ₹ 235/month |
| ₹ 45,000-₹ 60,000 | ₹ 510/month |
| ₹ 60,000-₹ 75,000 | ₹ 760/month |
| Above ₹ 75,000 | ₹ 1095/month |
Professional Tax in Gujarat
| Up to ₹ 5,999 | NIL |
| ₹ 6,000- ₹ 8,999 | ₹ 80/month |
| ₹ 9,000- ₹ 11,999 | ₹ 150/month |
| Above ₹ 12,000 | ₹ 200/month |
Professional Tax in Odisha
| Up to ₹ 5,000 | NIL |
| ₹ 5,000-₹ 6,000 | ₹ 30/month |
| ₹ 6,000-₹ 8,000 | ₹ 50/month |
| ₹ 8,000- ₹ 10,000 | ₹ 75/month |
| ₹ 10,000- ₹ 15,000 | ₹ 100/month |
| ₹ 15,000- ₹ 20,000 | ₹ 150/month |
| Above ₹ 20,000 | ₹ 200/month |
The Takeaway
If you are seeking help with professional tax registration and filing, you may consider reaching out to the experts Vakilsearch. Our professionals assist businesses and individuals in navigating the legal processes involved in tax registration and compliance.
To avail of our services, you can visit the Vakilsearch website or leave a comment below to discuss your specific requirements. Keep in mind that using our services can be extremely beneficial, especially if you want expert assistance and guidance in handling legal and regulatory aspects related to professional tax.
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