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Finance

All You Need to Know About Professional Tax!

The first thing that anyone does after knowing their CTC is divide it by 12 to know how much they will get in a month. To their surprise, the amount they receive at the end of the month is lesser than what they calculated. This is because there are a few deductions that are made in the monthly salary. Professional tax is one of them. Salaried workers must pay professional tax. The professional tax appears on monthly payslips along with your gross salary, allowance, and HRA. 

Professional tax is deducted from your gross salary along with EPF, TDS, and other deductions. This tax isn’t levied simply on professionals such as doctors, lawyers, etc. This tax is for salary earners in general.

What is professional tax?

Professional tax (PT) is a direct tax deducted from your gross wage. PT is slab-based and is capped at a maximum of Rs. 200 – 300. However, since state governments levy this tax, the actual amount varies per state. For example, the state of Telangana charges professional tax of Rs. 2500 in 5 years to professionals like CAs, legal practitioners, architects, etc.  It is to be noted that the benefits of a tax saving plan apply to your income post the deduction of professional tax.

Which professionals in India must pay professional tax?

Your taxes depend on your occupation and income. You can use an income tax calculator to compute your tax duties. If you are a first-time taxpayer, this can be overwhelming. Firstly, understand that professional tax is for more than just professionals.

Applicability of Professional Tax

Following is the list of those that are liable to pay Professional tax.

  1. Companies and Business Firms
  2. Chartered Accountants
  3. Limited Liability Partnerships
  4. Company Secretary
  5. Corporations
  6. Clubs
  7. Co-op Societies and Associations
  8. Hindu Undivided Family
  9. Lawyers and Legal Practitioners
  10. Contractors
  11. Architects
  12. Engineers
  13. Life insurance policy agents
  14. Surveyors
  15. Tax consultants
  16. Management consultants
  17. Doctors and other medical representatives

 

State-by-state tax tables

Professional slab rate differs from state to state. Some Indian states charge a professional tax: Maharashtra, Gujarat, Andhra Pradesh, Tamil Nadu, Madhya Pradesh, Karnataka, West Bengal, Bihar, Assam, Kerala, etc.

Professional Tax in West Bengal
Monthly SalaryTax
Up to Rs.10,0000
Rs.10,001 – 15,000Rs.110
Rs.15,001 – 25,000Rs.130
Rs.25,001 – 40,000Rs.150
Rs. 40,000+Rs.200
  
Professional Tax in Maharashtra
Monthly SalaryTax
Till Rs. 7,500 (men)NA
Till Rs .10,000 (women)NA
Rs.7,501 -10,000Rs. 175
Rs.10,000+Rs. 200 (300 for the last month)
  
Professional Tax in Karnataka
Monthly SalaryTax
Till Rs.14,999NA
Rs. 15,000+Rs. 200
  
Professional Tax in Andhra Pradesh
Monthly SalaryTax
Up to Rs.15,000NA
Rs.15,001 to Rs.20,000Rs. 150
Rs.20,000+Rs. 200
  
Professional Tax in Tamil Nadu
Monthly SalaryTax
Till Rs.3,500NA
Rs.3,5001 – 5,000Rs. 22.5
Rs.5,001 – 7,500Rs. 52.5
Rs.7,501 – .10,000Rs. 115
Rs.10,001 – 12,500Rs. 171
Rs.12,500+Rs. 208
  
Professional Tax in Telangana
Monthly SalaryTax
Till Rs. 15,000NA
Rs. 15,000 – 20,000Rs. 150
Rs. 20000+Rs. 200
  
Professional Tax in Kerala
Monthly SalaryTax
Up to Rs. 1999NA
Rs. 3,000 – 4,999Rs. 20
Rs. 3,000 –  7,499Rs. 30
Rs. 5,000 – 7,499Rs. 50
Rs. 7,500 – 9,999Rs. 75
Rs. 10,000 – 12,499Rs. 100
Rs. 12,500 – 16,666Rs. 125
Rs. 16,667 – 20,833Rs. 166
Rs. 20,834+Rs. 208

 

How does PT Work?

Like every direct tax, Professional Tax has a formula. The slab rate is set by each state or union territory. However, the State and Concurrent lists have the option of not levying professional tax. Most Indian states and union territories levy the professional tax for revenue.

Who Collects and Pays Professional Tax?

Employers are responsible for deducting and paying professional tax to employees’ respective state governments and registering and acquiring professional tax registration certificates. According to the state’s tax structure, freelancers without workers must also register.

Note: States exempt the professional tax for specific categories.

How to Pay Professional Tax?

Professional tax can be paid online & offline. You should visit your state’s website for exact details of payment modes.

Note: this needs to be paid monthly, but should be included in your overall tax saving plan or strategy.

Professional tax exemptions

If you fall into the below categories, you don’t need to pay PT.

  1. Member of Force (Army, Air Force, Navy)
  2. Individuals with physical/mental impairment.
  3. Parents of disabled children
  4. Charitable hospitals in locations under the taluk level.
  5. Badli workforce
  6. An individual in charge of an educational institution
  7. A foreign individual who has worked for the concerned state
  8. Anyone aged 65+ years
  9. Women who are exclusively employed as agents under the Mahila Pradhan Kshetriya Bachat Yojana.

FAQs

  1. Can a life insurance help me save Professional Tax?

You must pay professional tax if you do not fall under the PT exemption list. A life insurance policy can help you achieve other tax benefits.

  1. Does an income tax calculator compute professional tax?

Professional tax is a part of your tax liability. Thus, an income tax calculator considers professional tax.

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