Is Professional Tax Salary Deduction a Special Tax? Let’s Understand in Depth!

Professional tax is a type of special tax levied by respective state governments on an individual who makes a living by any profession or occupation. Additionally, one must not take Professional tax for its word meaning that only professionals need to pay this tax.

Instead, it includes the tax that someone has to pay because they are employed in any profession. There are rules for professional tax salary deduction that varies from one state to another.

Why Professional Tax Salary Deduction does vary in Different States?

Professional Tax comes under a jurisdiction of state government, and not under a control of a Central government. Hence, there is no single law which explains how one should calculate this tax for the entire country. Every state government has a body which frames laws regarding a collection of Professional tax.

The centre has specified what are the maximum amount that has to be collected in the given year. The rest of the rules related to a collection of professional tax are made by a respective state government. Therefore, each state has its own professional tax slab rates, so the tax calculated are based on these slabs. There are various states and Union Territories in India that does not charge Professional tax.

Instalment in Payments

Additionally, an entire tax for the year has been split into 12 equal instalments that an individual requires to pay every month. However, in various cases, the month of February required the payment of the higher tax than the rest of months. There are also situations where incomes from other sources become liable under different taxes.

For example, in some states, individual that runs a business related to medicine requires paying Rs 50 P.A. for every pharmacy they own. However, in such special taxes and fees will usually be subjected when a tax calculated on a yearly basis.

Who are Professionals that do Not get Professional Tax Deducted From Salary?

• Army, navy air force and other auxiliary force or reserve members
• People working for defence-related factories like Ordnance Factory
• Badli workers from a textile industry
• Employees having permanent physical disabilities such as blindness
• Parents or guardians of people with physical or mental disabilities
• Women under MPKBY scheme^[1] of small savings
• People above age of 65years.

Which States Oblige Professional Tax and related the Tax Slabs?

State	Tax Rate/Tax Amount (per month)	Income per Month
Andhra Pradesh	Nil	Less than Rs. 15,000
	Rs. 150	Rs. 15,000 to less than Rs. 20,000
	Rs. 200	Rs. 20,000 and above
Gujarat	Nil	Up to Rs. 5999
	Rs. 80	Rs. 6000 to Rs. 8999
	Rs. 150	Rs. 9000 to Rs. 11999
	Rs. 200	Rs 12000 and above
Karnataka	Nil	Up to Rs. 15,000
	Rs. 200	Rs. 15,001 onwards
Kerala (Half yearly income tax slabs & half yearly tax payment)	Nil	Up to Rs.11,999
	Rs.120	Rs.12,000 to Rs.17,999
	Rs.180	Rs.18,000 to Rs. 29,999
	Rs.300	Rs.30,000 to Rs. 44,999
	Rs.450	Rs.45,000 to Rs. 59,999
	Rs.600	Rs.60,000 to Rs. 74,999
	Rs.750	Rs.75,000 to Rs. 99,999
	Rs.1000	Rs.1,00,000 to Rs. 1,24,999
	Rs.1250	Rs.1,25,000 onwards
Maharashtra	Nil (for male)	Up to Rs. 7,500
	Nil (for female)	Up to Rs. 10,000
	Rs. 175 (for male)	From Rs. 7,500 to Rs. 10,000
	Rs. 200 for 11 months + Rs. 300 for 12th month	Rs. 10,000 onwards
Telangana	Nil	Up to Rs. 15,000
	Rs. 150	Rs.15,001 to Rs.20,000
	Rs.200	Rs.20,001 onwards
	Nil	Up to 5 years (For professionals such as CA, legal practitioners, architects, etc.)
	Rs. 2,500 (per annum)	Over 5 years (For professionals such as CA, legal practitioners, architects, etc.)
West Bengal	Nil	Up to 10,000
	Rs. 110	10,001 to 15,000
	Rs. 130	15,001 to 25,000
	Rs. 150	25,001 to 40,000
	Rs. 200	40,001 and above

Who Collects Professional Tax Salary Deduction?

Employers will collect the tax from their employees, or deduct it from the monthly salaries and then pay it to government. The employer may also collect all these deductions and then pay it up together to the State government. However, if in case they fail to do so, even after collecting deductions from their employees, they have to face penalties. Furthermore, they also have an option of letting the employees file their own Professional tax returns. However, once the sum is collected, the employer has to make sure that they pay the required Professional tax.

In case of a professional freelancer, then they can file their own Professional tax returns by filing a required form. After having Professional tax registration, they will receive a registration number. In future, this registration number can be used to pay the outstanding professional tax. However, it is advisable for such individuals to meet with the tax professionals. Certain states provide rebates if a due amount is paid as the lump sum and tax professionals know about such rebates in clarity.

Consequences of Violating Professional Tax Regulation

While an actual amount of penalty or penal interest will depend on the respective State’s legislation, a penalty can be levied by all such states for not having professional tax registration becomes liable. Furthermore, there are also penalties for not making a payment within the prescribed due date or failing to file the return within the prescribed due date.

Conclusion

All the employees working for firms and the people have their own businesses also need to pay this tax. Each & every individual living within a particular state, and earning an income becomes eligible to pay the professional tax. Since, State government levies this tax, its computation varies in different states. However, for several individuals, a professional tax is deducted from their salary itself.

The Corpbiz experts helps the customers in matters related to paying of taxes and filing the income tax returns as well. We professional CAs and lawyers to solve your problem and we are happy to serve you.

Read our article: Guide on Professional Tax Registration Process