Are you earning an income from a salary in India? Are you a practicing professional like a lawyer, doctor, or chartered accountant? If yes, then you must pay Professional Tax in India.
Professional tax stands out as a unique component in India’s complex taxation tapestry. It is a tax levied by state governments.
Despite its name, professional tax return filing is not just confined to professions but extends to all trades and employment.
This blog aims to demystify what Professional Tax is, outlining its rates, due dates, compliance requirements, and eligibility criteria.
What is Professional Tax?
Professional tax is a direct tax levied by state governments on the income earned by individuals working in government or non-government entities or practicing professionals such as lawyers, doctors, and chartered accountants.
The maximum amount that can be levied as professional income tax is ₹2,500 per annum, as per the Constitution of India. It is important to note that not all states impose professional tax.. It varies from state to state based on the respective state government’s legislation.
Eligibility Criteria for Professional Income Tax
The eligibility for professional tax is determined by the income threshold set by the respective state governments. If you are earning above a certain amount specified by the state’s legislation, you are required to pay this tax.
Professional tax will be applicable if you belong to any one of the following:
- Employees with fixed annual salaries
- Self-employed individuals like part-time earners or freelancers
- All professionals, like lawyers, architects, chartered accountants, or doctors
- Pensioners
States With and Without Professional Income Tax
| States/union territories that levy professional tax | States/union territories that do NOT levy professional tax |
| Andhra Pradesh, Assam, Bihar, Chhattisgarh, Gujarat, Jharkhand, Karnataka, Kerala, Madhya Pradesh, Maharashtra, Manipur, Meghalaya, Mizoram, Nagaland, Odisha, Puducherry, Sikkim, Tamil Nadu, Telangana, Tripura, West Bengal | Andaman and Nicobar Islands, Arunachal Pradesh, Chandigarh, Dadra and Nagar Haveli, Daman & Diu, Delhi, Goa, Haryana, Himachal Pradesh, Jammu & Kashmir, Lakshadweep, Punjab, Rajasthan, Uttarakhand, Uttar Pradesh |
List of Some State-Wise Professional Income Tax Slabs
| State | Salary Slabs | Professional Tax |
| Karnataka | Salary > ₹15,000 | ₹200/ month |
| Andhra Pradesh | Salary between ₹15,001 -₹20,000 | ₹150/ month |
| Salary > ₹20,001 | ₹200/ month | |
| For Certain Professionals | Tax Per Month | |
| For contractors with annual turnovers below ₹10 lakhs | Nil | |
| For contractors, owners/lessees of factories, hotels, bars, etc., with a turnover above ₹25 lakhs + Anyone employed in the entertainment industry | ₹2500/month | |
| West Bengal | Salary between ₹10,001 -₹15,000 | ₹110/ month |
| Salary between ₹15,001 -₹25,000 | ₹130/ month | |
| Salary between ₹25,001 -₹40,000 | ₹150/ month | |
| Salary > ₹40,000 | ₹200/ month | |
| For professionals with an annual gross income of ₹4,80,001 and above | ₹2400 per annum | |
| Maharashtra | Salary up to ₹10,000 (women) | – |
| Salary between ₹7,501 -₹10,000 (others) | ₹175/ month | |
| Salary > ₹10,000 | ₹200 all month and ₹300 for last month | |
| Tamil Nadu | Salary between ₹3,501 -₹5,000 | ₹22.5/ month |
| Salary between ₹5,001 -₹7,500 | ₹52.5/ month | |
| Salary between ₹7,501 -₹10,000 | ₹115/ month | |
| Salary between ₹10,001 -₹12,500 | ₹171/ month | |
| Salary > ₹12,500 | ₹208/ month | |
| Telangana | Salary between ₹15,000 -₹20,000 | ₹150/ month |
| Salary > ₹20,000 | ₹200/ month | |
| Kerala | Salary between ₹3,000 -₹4,999 | ₹20/ month |
| Salary between ₹5,000 -₹7,499 | ₹50/ month | |
| Salary between ₹7,500 -₹9,999 | ₹75/ month | |
| Salary between ₹10,000 -₹12,499 | ₹100/ month | |
| Salary between ₹12,500 -₹16,666 | ₹125/ month | |
| Salary between ₹16,667 -₹20,834 | ₹166/ month | |
| Salary > ₹20,834 | ₹208/ month |
It’s important to note that these slabs are subject to change based on the state government’s policies.
Who Should Collect and File the Professional Tax Returns?
The maximum amount anyone is liable to pay when it comes to Professional Tax is ₹2500 per year, regardless of which Indian state you are a resident of.. The responsibility for professional tax return filing varies:
- Employers: If you are a salaried employee, then your employer is required to deduct the Professional Tax from your salary and deposit it with the state government.
- Individual Professionals: If you are practicing law, medicine, or accountancy, you must directly file professional tax returns with the state government based on the slabs applicable to your earnings.
- Business Owners: If you are a sole proprietor and business owner (partnership firm, corporate), pay professional tax on your earnings, in addition to collecting and depositing the tax for your employees.
In this scenario, the business owner is required to secure two types of certificates: one for paying professional tax on their business activities, known as a professional tax registration certificate, and another, a professional tax enrollment certificate, which authorizes them to withhold the tax from their employees’ salaries and remit it. Additionally, the laws of the particular state may necessitate individual registrations for each branch of the business.
Professional Tax Return Filing: Compliance and Due Dates
Statewise Due Dates </H3?
| State | Periodicity | Professional Tax Due Date |
| Andhra Pradesh | Monthly | 10th every month |
| Assam | Monthly | 28th every month |
| Bihar | Yearly | 30th of November |
| Gujarath | Monthly | 15th every month |
| Jharkhand | Yearly | October 31st |
| Karnataka | Monthly | 20th every month |
| Kerala | Half Yearly | 28th of February and 31st of August |
| Madhya Pradesh | Monthly | 10th every month |
| Maharashtra | Monthly | On the last day of every month |
| Manipur | Yearly | 30th of March |
| Meghalaya | Monthly | 28th of every month |
| Odisha | Monthly | On the last day of every month |
| Mizoram | Yearly | June 30th |
| Puducherry | Half Yearly | 30th of June and the 31st of December |
| Sikkim | Quarterly | The 31st of July, the 31st of October, the 31st of January, and the 30th of April |
| Tamil Nadu | Half Yearly | 30th of September and the 31st of March |
| Telangana | Monthly | 10th of every month |
| West Bengal | Monthly | 21st of every month |
Compliance
Compliance with professional tax regulations involves timely deductions and payments to the state government.
Employers must obtain a registration certificate from the professional tax office when they employ staff, and they are required to file returns – monthly, quarterly, or annually, depending on the state’s regulations.
Failure to comply with professional tax regulations can lead to a penalty of up to 2% of the tax amount due to be paid. Therefore, both employers and professionals must stay informed about the due dates and compliance requirements in their respective states.
All About Professional Tax Return Filing
- The applicability of professional tax is based on the state of profession, employment, or trade.
- Each state that implies professional tax also follows a strict payment deadline. Failure to comply with the same can result in penalties.
- You require proper identification documents and company documents as an employer to complete professional tax return filing. These can be documents like your PAN Card, Aadhar, bank statements, address proof like utility bills, etc.
- Professional tax can be paid online if your state offers an online portal or website. States like Tamil Nadu, Karnataka, Maharashtra, West Bengal, etc., offer dedicated online portals. If this option is unavailable in your state, you can pay the same offline in your state.
Exemptions for Professional Tax Return
The professional tax is applicable to all income earners. However, there are some exemptions in this category, and they are as follows.
- An employee or working professional who is 40% mentally or physically challenged
- Factory workers hired on a contractual basis.
- Any income earner above the age of 60.
- Any worker in government bodies like the Army, Navy, Air Force, etc.
- Workers from any union territory.
- Female employees with a specific limit of monthly income. However, this is an individual decision of each state that applies professional tax.
Conclusion
Professional tax, impacts individuals and businesses.
Understanding how it works, what rates apply to you, when you need to make your payments and the subsequent penalties regarding late payments and professional tax return filing is essential for everyone subject to this tax.
Since professional tax is governed by state legislation, it is important to be aware of the specific rules and regulations applicable in each state. Staying compliant not only contributes to the state’s revenue but also ensures avoidance of any legal repercussions.
To reduce your tax liability in other tax brackets, like capital gains tax, consulting a SEBI-registered advisory can help. You will get professional guidance on which long-term stocks to buy and how to manage them with detailed reports for better financial independence.
FAQs on Professional Tax
How is professional tax calculated?
The professional tax is deducted based on the tax slab system, which is unique to each state. If you fall under the salary brackets included in the slab system, you will have to pay professional tax every month.
How to pay professional tax?
For employees, the employers need to pay professional tax to the government on their behalf, along with completing their professional tax return filing.
Self-employed individuals need to pay it themselves after registering with the state government.What is tax loss harvesting?
For better financial planning and reducing tax liability, tax loss harvesting is a strategy for better financial management. It helps you decide which profitable assets and securities to sell out at a potential loss to reduce the capital gain tax value. This further reduces an individual’s tax liability.
I’m Archana R. Chettiar, an experienced content creator with
an affinity for writing on personal finance and other financial content. I
love to write on equity investing, retirement, managing money, and more.