When you take a look at your payslips, you will notice a small deduction mentioned on it, along with the other components like HRA, conveyance and basic salary break ups. This deduction is usually around Rs. 200 and is termed as professional tax. Generally, this type of tax varies from state to state and in certain places, you may realise that there is no deduction made under this heading. Let’s begin by answering the most basic question- “What is professional tax?”
Professional tax can be defined as a tax that is levied by a state government on all individuals who earn a living through any medium. This must not be confused with the definition of other professionals such as doctors or lawyers. This is a type of tax that needs to be paid by each and every individual earning income. The calculation of this tax and the amount collected differs from one state to another. However, the limit has been set to Rs. 2500 per year.
Since professional tax is levied by the state government, it tends to differ for various states. Each state declares a slab and the professional tax is deducted on the basis of these slabs. However, there are few states and union territories in India that do not charge professional tax too. It is paid by dividing the annual professional tax due into 12 equal instalments, which are to be paid every month. February, as a month, is an exception where the tax is higher than the other months.
There might be situations where sources of income falling under different sectors are also liable for a separate tax. To cite an instance, in some states, an individual running a business in the transport industry might be liable to pay a professional tax of about Rs. 50 per annum for every vehicles he owns. This may be subject to a cap of Rs. 1,000 per annum.
Employers collect a certain amount as professional tax from the monthly salaries of their employees. This portion is then paid by the employer to the government. In case they fail to do so, they can be subject to penalties for not collecting or failing to pay the professional tax. Also, if you do it for anyone, then you are liable to pay the professional tax yourself.
If you are a professional who does not work with an employer, you can pay your professional tax by registering for it by applying through a form. Once you receive the form, a registration number will be issued to the individual. Payment of the professional tax can be made under these registration numbers at banks. It is important to note that, in some states, the government provides rebates on the taxes if it is paid in a lump sum for a couple of years together. This is done so it is worth enquiring about the rules of professional tax in your state.
Each state tends to have its own slab for professional taxes. Here is a list of the slabs for various states and union territories in India.
| Monthly Salary (in Rs.) | Tax (Per month in Rs.) |
|---|---|
| Up to 7,500 for men | Nil |
| Up to 10,000 for women | Nil |
| 7,500 to 10,000 | 175 |
| 10,000 and above | 200 ( And 300 for February) |
| Monthly Salary (in Rs.) | Tax (Per month in Rs.) |
|---|---|
| Up to 15,000 | Nil |
| More than 15,000 | 200 |
| Monthly Salary (in Rs.) | Tax (Per month in Rs.) |
|---|---|
| Up to 8,500 | Nil |
| 8,501 to 10,000 | 90 |
| 10,001 to 15,000 | 110 |
| 15,001 to 25,000 | 130 |
| 25,001 to 40,000 | 150 |
| More than 40,000 | 200 |
| Monthly Salary (in Rs.) | Tax (Per month in Rs.) |
|---|---|
| Up to 1.5 Lakhs | Nil |
| 1.5 lakhs to 1.8 lakhs | 125 |
| 1.8 lakhs and above | 212 |
| Monthly Salary (in Rs.) | Tax (Per month in Rs.) |
|---|---|
| Up to 21,000 | Nil |
| 21,001 to 30,000 | 100 |
| 30,001 to 45,000 | 235 |
| 40,001 to 60,000 | 510 |
| 60,001 to 75,000 | 760 |
| 75,001 and above | 1095 |
| Monthly Salary (in Rs.) | Tax (Per month in Rs.) |
|---|---|
| Up to 15,000 | Nil |
| 15,001 to 20,000 | 150 |
| Above 20,000 | 200 |
| Monthly Salary (in Rs.) | Tax (Per month in Rs.) |
|---|---|
| Up to 5,999 | Nil |
| 6,000 TO 8,999 | 80 |
| 9,000 to 11,999 | 150 |
| More than 12,000 | 200 |
| Monthly Salary (in Rs.) | Tax (Per month in Rs.) |
|---|---|
| Up to 5,000 | Nil |
| 5,001 to 6,000 | 30 |
| 6,001 to 8,000 | 50 |
| 8,001 to 10,000 | 75 |
| 10,001 to 15,000 | 100 |
| 15,001 to 20,000 | 150 |
| More than 20,000 | 200 |
Yes, if you are a salaried individual, it is mandatory to pay professional tax.
The following are exempt from paying professional tax in Maharashtra-
Members of army, air force, navy and related auxiliary forces or reservists.
Persons on establishment of defence ordnance factories.
Badli workers in textile industry.
Persons with permanent physical disability including blindness.
Parents or guardian of any person suffering from a physical disability or mental retardation.
Women exclusively engaged as agents under MPKBY scheme of directorate of small savings.
Persons who have completed the age of 65 years.
Since professional tax is a tax levied by the state government, it usually differs from one state to another. Each state has its own slab that it declares and the professional tax is deducted based on these slabs.
As Union Territories are small regions of the country, they tend to generate lower revenue than states. Hence, professional tax is not applicable for employees working in a Union Territory.
The maximum amount of professional tax levied by a state is Rs. 2,500 which is allowed as a deduction from your salary.
