What is Professional Tax?
Professional Tax (PT) is a state-level tax levied on income earned from employment, profession, trade, or calling. It is collected by state governments in India and is deducted from your salary by your employer.
Unlike income tax which is a central government tax, Professional Tax is administered by individual states. Not all states levy PT - states like Delhi, Punjab, Haryana, and Rajasthan do not have Professional Tax.
Key Features of Professional Tax
- State-Specific: Each state has its own PT slabs and rates
- Maximum Limit: PT is capped at Rs. 2,500 per year (as per constitutional limit)
- Tax Deductible: PT paid is deductible under Section 16 of the Income Tax Act
- Employer Responsibility: Your employer deducts PT from your salary and deposits it with the state government
- Slab-Based: PT amount depends on your monthly salary slab
States with Professional Tax
The following states levy Professional Tax in India:
- Maharashtra: Max Rs. 2,500/year, Rs. 200/month for salary above Rs. 10,000
- Karnataka: Max Rs. 2,400/year, Rs. 200/month for salary above Rs. 15,000
- West Bengal: Graduated slabs from Rs. 110-200/month
- Tamil Nadu: Half-yearly payment, graduated slabs
- Andhra Pradesh & Telangana: Rs. 200/month for salary above Rs. 20,000
- Gujarat: Rs. 200/month for salary above Rs. 12,000
- Kerala: Half-yearly payment, graduated slabs up to Rs. 1,000
- Madhya Pradesh: Rs. 200/month for salary above Rs. 33,333
- And many more Northeast and Central Indian states
States Without Professional Tax
These states do not levy Professional Tax:
- Delhi (National Capital Territory)
- Punjab
- Haryana
- Rajasthan
- Uttar Pradesh
- Uttarakhand
- Himachal Pradesh
- Jammu & Kashmir
- Goa
How is Professional Tax Calculated?
Professional Tax is calculated based on:
- Your Gross Monthly Salary: Including basic pay, DA, and other allowances
- State-Specific Slabs: Each state has different income slabs with corresponding PT amounts
- Frequency: Some states deduct monthly, others half-yearly
- Annual Cap: Maximum PT cannot exceed Rs. 2,500 per year
Professional Tax Benefits
- Tax Deduction: PT paid is deductible from your gross salary while calculating taxable income
- Low Amount: Maximum deduction is only Rs. 2,500/year, making it a minor expense
- State Revenue: PT contributes to state government revenue for public welfare
Frequently Asked Questions
What is the maximum Professional Tax in India?
The maximum Professional Tax that can be levied is Rs. 2,500 per year as per Article 276(2) of the Indian Constitution. No state can charge more than this amount.
Is Professional Tax deductible from income tax?
Yes, Professional Tax paid is fully deductible under Section 16 of the Income Tax Act. You can claim this deduction while filing your income tax return under both old and new tax regimes.
Who is liable to pay Professional Tax?
All salaried employees earning above the exemption threshold in states that levy PT are liable. Self-employed professionals, traders, and business owners may also be liable depending on their income and state regulations.
Is Professional Tax same across all states?
No, Professional Tax rates and slabs vary significantly across states. Each state government sets its own PT structure. Some states like Delhi, Punjab, and Haryana don't levy PT at all.
How is PT different from Income Tax?
Income Tax is a central government tax based on your annual income with progressive slabs (5%-30%). Professional Tax is a state government tax with a maximum cap of Rs. 2,500/year, calculated on monthly salary slabs.
When is Professional Tax deducted?
PT is typically deducted monthly from your salary by your employer. Some states like Tamil Nadu and Kerala have half-yearly payment schedules. The employer then remits this to the state government.