Know the details of professional tax deductions from your salary with our comprehensive guide. Navigate through various state-wise salary ranges and corresponding professional tax rates. Ensure you stay informed about your financial obligations, and let us guide you through the intricacies of professional tax deductions effortlessly.
If you have taken a close look at your detailed payslip, you might have seen certain deductions in it. You don’t get your full basic pay every month. Rather, a certain sum of money is lost from that, and this might be due to EPF deduction of TDS deductions. Another important deduction that occurs on your basic salary is the one for Professional tax. While you are losing out on some money due to this, how many of you are aware of what it is? Do you know what Professional tax is and why you have to pay it? If not, then this article is a good place to start! Here’s a look at how and why professional tax is deducted from your salary.
What is Professional Tax?
Professional tax is a special tax levied by respective state governments on individuals who make a living via any profession or occupation. Additionally, you must not take Professional tax for its word meaning and suppose that only professionals need to pay this tax. Rather, it is an umbrella term that includes the tax that someone has to pay because they are employed in any profession. Even employees working for firms and people owning businesses need to pay this tax. Therefore, in no way is the Professional Tax just for doctors, engineers or lawyers Each and every individual living within a particular state and earning an income is eligible to pay this tax. Since the State government levies this tax, its computation varies in different states. However, the Centre has made it clear that no State can collect Professional tax of more than ₹2,500 per year. Hence, for several individuals, the professional tax is deducted from their salary.
With the help of an online CTC calculator, you can calculate your salary after all the deductions without anyone’s help.
Why Does Professional Tax Deducted From Salary Vary?
Professional Tax comes under the jurisdiction of state governments, and not under the control of the Central government. Therefore, there is no single law that explains how to calculate this tax for the entire country. Rather, every state government has a body that frames laws regarding the collection of Professional tax. As mentioned above, the center has only specified what is the maximum amount that may be collected in a given year. Therefore, the rest of the rules related to the collection of professional tax are made by the respective state governments. Hence, each state has its own professional tax slab rates, and so the tax is calculated based on these slabs. Also, certain states and Union Territories in India do not charge Professional tax.
Furthermore, the entire tax for a year is split by 12 into equal installments which the individual pays every month. However, in some cases, the month of February requires the payment of a higher tax than the rest of the months. There are also situations wherein incomes from various sources become liable to different taxes. For instance, in some states, individuals who run a business related to medicine must pay ₹50 p.a for every pharmacy they own. However, such special taxes and fees will usually be subjected to a cap when calculated on a yearly basis.
Who Collects the Professional Tax Deducted From Salary?
- Employers can collect the tax from their employees, or deduct it from their monthly salaries and then pay it as a whole. The employer can collect all these deductions and then pay it up together to the State government. However, if they fail to do so, even after collecting deductions from their employees they will have to face penalties. Furthermore, they also have the option of letting their employees file their own Professional tax returns. However, once you collect the sum, the employer must make sure that he or she pays the required Professional tax
- In case you are a professional freelancer, you can file your own Professional tax returns by filing the required form. After you register with the concerned authorities, you will receive a registration number. In the future, this registration number may be used to pay your outstanding professional tax.
However, before doing so, it is advisable for such individuals to meet with tax professionals. Certain states provide rebates if the due amount is paid as a lump sum and tax professionals will know about such rebates in clarity.
How Much Professional Tax Is Deducted From Salary by Each State?
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 Karnataka
| Up to ₹15,000 | NIL |
| Above ₹15,000 | ₹200/month |
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 Andhra Pradesh
| Up to ₹15,000 | NIL |
| ₹15,000- ₹20,000 | ₹150/month |
| Above ₹20,000 | ₹200/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 |
Which Professionals Don’t Get Professional Tax Deducted From Salary Usually?
- Army, air force, navy, and other auxiliary force or reserve members
- People working in defense-related factories like Ordnance Factory
- Badli workers from the textile industry
- Employees who have permanent physical disabilities such as blindness
- Parents/guardians of people with physical or mental disabilities
- Women under MPKBY scheme of small savings
- People above the age of 65
When Can Professional Tax Paid be Claimed as a Deduction?
Professional tax serves as a revenue source for state governments that enforce it. The collected funds are deposited into the state government’s treasury. Individuals with a net taxable income under the Income-tax Act, 1961, can deduct the professional tax paid from their taxable income when calculating their income tax liability. Employers of salaried individuals handle the payment of professional tax on behalf of their employees, which is reflected in Form-16 and can be claimed as a deduction during income tax filing.
Self-employed professionals and businesses can deduct professional tax paid as business expenditure. Section 16(iii) of the Income-tax Act allows for the deduction of professional tax from salary or taxable income. However, if an individual’s net taxable income falls below the basic exemption limit, they cannot claim a deduction for professional tax and cannot adjust, carry forward, or receive a refund for the payment.
Maximum Amount of Professional Tax
Here’s a list of some of the states which levy professional tax:
| Name of state | Range of salary income in ₹ | Range of professional tax |
| Andhra Pradesh | ₹15,001 to more than ₹20,000 | ₹150 to ₹200 |
| Karnataka | Above ₹15,000 | ₹200 |
| Maharashtra | ₹7,501 to above ₹10,000 | ₹175 to ₹200 |
| Tamil Nadu | ₹21,001 to above ₹75,000 | ₹20 to ₹208 |
| Assam | ₹10,001 to above ₹25,000 | ₹150 to ₹208 |
| Kerala | ₹2,000 to above ₹20,833 | ₹20 to ₹208 |
| Meghalaya | ₹4,167 to above ₹41,667 | ₹16.5 to ₹208 |
| Tripura | ₹7,501 to above ₹15,001 | ₹150 to ₹208 |
| Bihar | ₹25,001 to above ₹83,333 | ₹100 to ₹208 |
| Jharkhand | ₹25,001 to above ₹83,333 | ₹100 to ₹200 |
| Gujarat | Above ₹12,000 | ₹200 |
| Madhya Pradesh | ₹18,751 to above ₹33,334 | ₹125 to ₹208 |
| West Bengal | ₹10,001 to above ₹40,001 | ₹110 to ₹200 |
| Manipur | ₹50,001 to above | ₹100 to ₹208 |
| Mizoram | ₹5,001 to above ₹15,001 | ₹75 to ₹208 |
| Odisha | ₹13,333 to above ₹25,000 | ₹125 to ₹200 |
| Puducherry | ₹8,333 to above ₹41,667 | ₹125 to ₹208 |
| Sikkim | ₹20,001 to above ₹40,001 | ₹125 to ₹200 |
| Telangana | ₹15,001 to above ₹20,000 | ₹125 to ₹200 |
| Nagaland | ₹4,001 to above ₹12,001 | ₹35 to₹208 |
| Chhattisgarh | ₹8,333 to above ₹20,833 | ₹130 to ₹208 |
| Meghalaya | above ₹12000 | ₹200 |
What is the Penalty for Not Paying Professional Tax?
Employers take care of professional tax obligations for salaried individuals, while others must manage their own payments. Penalties for non-payment of professional tax differ by state. In Maharashtra, late payment attracts interest ranging from 1.25% to 2% per month, along with an additional 10% penalty on the outstanding tax amount. Failing to file a return incurs a flat penalty of ₹1,000. In Karnataka, late payment accrues interest at 1.25% per month, with a penalty of ₹250 per month for delayed return filing.
Conclusion
We have endeavored to furnish you with clear and pertinent information on salary ranges and professional tax rates across various states. If you have any further queries or require assistance, please do not hesitate to reach out to our dedicated team. Feel free to contact us directly or leave your comments below, and we will be more than happy to assist you. Your satisfaction is our priority, and we are here to ensure a smooth and hassle-free experience for your tax-related concerns.
Frequently Asked Questions
How do I avoid professional tax on my salary?
To avoid professional tax on your salary, ensure your employer accurately deducts it from your pay and promptly remits it to the government. Comply with tax laws, file returns on time, and explore exemptions and deductions available under local regulations to minimise your tax liability legally.
Can we skip professional tax?
No, skipping professional tax is not an option as it's mandatory in all states. Attempting to evade it can result in penalties and legal consequences. Employers are responsible for deducting and remitting professional tax on behalf of employees, ensuring compliance with tax laws.
Can professional tax be refunded?
Professional tax is generally non-refundable once paid. It's a compulsory levy imposed by state governments on individuals earning income within their jurisdiction. The amount of professional tax varies across states and is often calculated based on income slabs.
What is the professional tax for ₹25000 salary?
The professional tax for ₹25000 salary is ₹100. The tax might vary from time to time. Contact our tax experts for more information.
Is professional tax calculated on basic salary?
Professional tax, along with TDS, EPF, and other deductions, is subtracted from your gross salary.
Who pays professional tax?
Individuals who receive a salary or engage in professions like chartered accountancy, company secretaryship, law, medicine, etc., are obligated to pay professional tax. The rates and collection methods vary across different states.
How much professional tax deduction from salary?
Professional tax deduction from salary varies depending on the state or region in India. Generally, it ranges from ₹2,500 to ₹2,000 per month. The amount is deducted at source by the employer and the collected tax is paid to the state government. It's an obligatory contribution for professionals.
How do I claim professional tax in ITR
To claim professional tax in your Income Tax Return (ITR), report the amount paid under the ‘Income from Salary’ section. It falls under the category of deductions allowed under Section 16 of the Income Tax Act, 1961. Ensure accurate reporting of the professional tax paid during the financial year for tax benefits.
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