Professional Tax In India

What is Professional Tax?

A professional tax is a direct tax levied by the government on employees and professionals. The Professional Tax is a source of revenue for the state governments, which helps implement schemes for the welfare and development of the region.

The professional tax is a state tax, and the tax rates vary from state to state. Down below, we have dedicated state-wise pages with state-specific information and references.

Just like the income tax, the professional tax is linked to the income slabs. It is deducted at the source by the employer. It is a nominal tax and never exceeds a few hundred rupees a month. The maximum amount of Professional Tax that any state can impose in India is ₹2500. Further, the total amount of Professional Tax paid during the year is allowed as a deduction under the Income Tax Act.

The objective of this article is to provide a broad overview of the subject in general terms and the various state links. We recommend that you double-click into each of these state-wise links for more detailed information, including slab rates.

Professional Tax Slabs

Check out the tax slabs for a given state by selecting the state from the drop-down below:

State-wise Professional Tax Acts

Each state has passed its Professional Tax Act with local compliances. These acts are also amended from time to time. Check out the specifics by clicking on one of the states shown below.

States Where Professional Tax is not Applicable

Professional tax is not applicable in the states mentioned below:

Andaman and Nicobar IslandsArunachal PradeshChandigarhDadra and Nagar Haveli
Daman and DiuDelhiGoaHaryana
Himachal PradeshLadakhLakshadweepRajasthan
UttaranchalUttar Pradesh

Applicability

The professional tax applies to employees (wage earners) of almost all industries. It's also applicable to professionals like doctors, chartered accountants (CAs), consultants, traders, and other self-employed individuals.

Apart from individuals, the professional tax applies to various other "persons." The definition of a legal person is broad and extends to organizations and groups like:

  • Corporations
  • Companies
  • Branches Offices of Companies
  • Co-operative societies
  • Clubs and associations
  • Hindu Undivided Family (HUF)

Who is exempted from professional tax?

There are exemptions provided for specific individuals to pay Professional Tax under the Professional Tax Rules. The following individuals are exempt from paying professional tax:

  • Parents of children with permanent disability or mental disability.
  • Members of the forces as defined in the Army Act 1950, the Air Force Act 1950, and the Navy Act 1957, including members of auxiliary forces or reservists serving in the state.
  • Badli workers in the textile industry.
  • An individual suffering from a permanent physical disability (including blindness).
  • Women exclusively engaged as an agent under the Mahila Pradhan Kshetriya Bachat Yojana or Director of Small Savings.
  • Parents or guardians of individuals who have a mental disability.
  • Individuals above 65 years of age.

Even for "persons" who are non-exempt, most do not have to pay professional tax if their income is below a certain threshold.

The above is a broad list of exemptions. Please refer to the rules for the individual states below for specific information related to your state.

Who is responsible to deduct the profession tax?

The employer is responsible for registering, deducting, and paying the professional tax to the government regularly for employees and wage earners. Failure to comply has consequences like fines and penal tax.

However, in self-employed professionals, the individuals are personally responsible for paying their professional tax. They will first need to enroll and obtain a Certificate of Enrollment from the tax department.

Consequences

Fails to Get Registration: The person or company will be liable to a penalty for the period during which it remains unregistered.

Fails to Deposit to the Government/ Late Deposition: Will be liable to a penalty for the delay duration.

Non-Deposition of Amount: The officials have the power to recover such amount along with applicable penalty and interest from the assets of such defaulter. Moreover, they can even attach the bank account also. In severe cases, defaulters can be prosecuted.

Notifications

West Bengal extends Professional Tax e-filing to 31 Aug 2021 and paper form to 07 Sep 2021

28 Jun, 2021
The Directorate of Commercial Taxes, West Bengal has allowed the return filing in Form III, for the year end period of 31 March 2021, through electronic form to 31 August 2021 and paper form to 07 September 2021.
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Maharashtra extends filing of Professional Tax Annual Returns to 30 June 2021

17 Jun, 2021
The Maharashtra Professional Tax Annual Returns shall be filed on or before 30 June 2021 on the website of [Maharashtra Goods and Services Tax Department](https://mahagst.gov.in/en).

Karnataka extends Professional Tax filing For April and May 21

26 Apr, 2021
The Government of Karnataka with The Karnataka Tax on Professions, Trades, Callings, and Employments (Removal of Difficulties) Order, 2021 made an extension to the Professional Tax Return Filing.

Karnataka Extends Dues Date for Professional Tax Annual Return and Payment to 30 June 2021

26 Apr, 2021
The annual return and payment filing of Karnataka State Professional Tax is further extended to 30 June 2021.

West Bengal extends Professional Tax e-filing to 30 June 2021 and paper form to 15 July 2021

21 Apr, 2021
The Directorate of Commercial Taxes, West Bengal has allowed the return filing in Form III, for the year end period of 31 March 2021, through electronic form to 30 June 2021 and paper form to 15 July 2021.
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