PROFESSIONAL TAX

What is Professional Tax?

Professional Tax is the tax charged by the State Government. Professional Tax is applicable on the income earned by an employer. A professional has to pay Rs 2500 as tax every year to any local or state authority for the Tax on profession, trades, or employment.

Professional Tax is somewhat like Income Tax. Professional tax is managed by the state government and at the time of introduction, Rs.2500 was the maximum tax limit.

Why is Professional Tax different for different States?

As the professional tax is charged by the State Government, it differs from one state to other. Every state declares a slab, and all the professional taxes are paid based on these slabs. However, many union territories and states do not charge any professional tax.

In India, the professional tax is paid in 12 instalments, where the income source falls under different categories and the tax liability is also separate.

Who should pay the Professional Tax?

Professional Tax in India is paid by the following: Individuals, Companies, Limited Liability Partnership, Corporation, HUF Associations, Societies, Clubs, Legal Practitioners, Contractors, Architects, Engineers, Insurance Agents, Charted Accountants, Company Secretaries, Surveyors, Tax Consultants, management professionals as well as medical representatives such as doctors.

Who is Exempted from paying Professional Tax?

  1. Ex-serviceman
  2. Individuals serving in the Central Para Military Force (CPMF)
  3. People who run educational Institutions teaching up to class 12
  4. Handicaps with at least 40% disability. A relevant Certificate must be submitted.
  5. Any person who has a permit for a single three-wheeler or a single taxi to carry goods.
  6. Individuals who are deaf, dumb, and blind are earning a salary.
  7. Civilians as well as non-civilian members from the armed forces.
  8. Technicians from foreign countries who are employed by the state

The penalties on professional Tax vary in each state. Also, there is a penalty for Non-Registration. Along with the penalty for non-payment, there is also a penalty for late return filing.

Professional Tax Rate

The maximum amount of tax penalty to pay for Professional rate is Rs.2500. The slab amount based on the professional’s gross income. The amount will be deducted from the employee’s income every month. The Professional Tax is levied by the State Government in India. States that charged Professional Tax are Karnataka, West Bengal, Andhra Pradesh, and many more. The deducted amount as Professional Tax from the employer salary equals the amount with the State Government.

Professional Tax Registration

The application of Professional Tax registration should be submitted within 30 days of employing staff in the business. The application should be sent to the State Tax Department. If there are multiple places of work, the application should be made separately for each authority, considering each place of work falls under the authority’s jurisdiction.
In the delay of the Professional Tax, a penalty of Rs 5 each day will be charged. On the late payment, a penalty of 10% of the Tax will be charged, if there is the late filling of return, Rs.300 will be imposed.

Who has to pay Professional Tax?


Professional Tax in India is applicable for the individuals and entities mentioned here :

Companies, Firms, Limited Liability Partnerships, Corporation, Societies, Huf, Associations, Clubs, Legal Practitioners, contractors, Architects, Engineers, Insurance Agents, Chartered Accountants, Company Secretaries, Surveyors, Tax consultants, management professionals as well as medical representatives such as doctors, etc.

Who is Exempted from paying Professional Tax?

  1. Ex-serviceman
  2. Individuals serving in the Central Para Military Force (CPMF)
  3. People who run educational Institutions teaching up to class 12
  4. Handicaps with at least 40% disability. A relevant Certificate must be submitted.
  5. Any person who has a permit for a single three-wheeler or a single taxi to carry goods.
  6. Individuals who are deaf, dumb, and blind are earning a salary.
  7. Civilians as well as non-civilian members from the armed forces.
  8. Technicians from foreign countries who are employed by the state

The penalties on professional Tax vary in each state. Also, there is a penalty for Non-Registration. Along with the penalty for non-payment, there is also a penalty for late return filing.

Professional Tax Rate


The maximum amount an individual needs to pay as Professional Tax is Rs. 2500. The slab amount is usually based on the gross income of the professional. It happens to be deducted from his/ her income every month by the employer. The following state governments levy professional Tax in India.

Karnataka, West Bengal, Andhra Pradesh, Maharashtra, Tamil Nadu, Gujarat, Assam, Chhatisgarh, Kerala, Meghalaya, Orissa, Tripura, and Madhya Pradesh.

The amount deducted as Professional Tax by the employer from the salary/ wages has to deposit the same amount with the state Government.

Professional Tax Registration


The application for registration of Professional Tax must be submitted to the State Tax Department within 30 days of employing staff in a business. If there is more than one place of work, the application must be made separately to each authority considering the place of work coming under that authority's jurisdiction.

If there's a delay in Professional Tax, it can lead to a penalty of Rs. 5 per day. On non-payment or late payment, there will be a penalty of 10% of the Tax if there's the late filing of returns, a penalty of Rs. Three hundred will be imposed.

Frequently Asked Questions

How is professional Tax calculated?

A professional tax is calculated based on the salary and predetermined slabs of the employer. You can pay anything between Rs 200 to Rs 2500 a month as per slab.

How much Professional Tax is deducted from my salary?

The maximum amount of professional tax that can be charged from any employee is Rs.2500 and it is usually deposited from the employee’s salary to the state government.

Is it mandatory to pay Professional Tax?

Professional Tax is charged as per Section (3) of the Income Tax. Few states like Haryana, Rajasthan, and Arunachal don’t charge this tax.

Why is Professional Tax Different in every state?

As professional tax charged by the State Government, that’s why it varies from one state to another. Each state has its own rules and regulations.