Do you know that professional tax is deducted from your salary on a monthly basis? Know all about Professional Tax in this article.
Professional tax is the tax imposed by the state government on the income earned by an individual through a profession. It is a tax on all kinds of professions, trades, and employment and levied based on the income of such profession, trade and employment.
Levied under Article 276(2) of the Indian Constitution, Professional Tax is deducted by the employer from the salaries of employees every month and remitted to the state. The maximum amount levied is Rs. 2500. Professional tax is compulsory and is exempt from income tax. The amount can be shown as a deduction from your salary income in your income tax-returns.
Professional tax varies from one state to another. Hence, it is different in different states. Every state has its own laws and regulations which govern professional tax of a particular state.
All the states follow a slab system on the income to levy professional tax. Here is the tax slab across key states in India.
| State | Income (p.m. or annual) | Tax (p.m.) |
|---|---|---|
| Maharashtra | Rs. 10,000+ (monthly) | Rs. 200 per month and Rs. 300 in Feb |
| Karnataka | Rs. 15,000+ (monthly) | Rs. 200 |
| West Bengal | Rs. 40,000+ (monthly) | Rs. 200 |
| Madhya Pradesh | Rs. 1.8 lakhs+ (annual) | Rs. 212 |
| Tamil Nadu | Rs. 75,001+ (half yearly) | Rs. 1095 |
| Andhra Pradesh | Rs. 20,000+ (monthly) | Rs. 200 |
| Gujarat | Rs. 12,000+ (monthly) | Rs. 200 |
| Odisha | Rs. 20,000+ (monthly) | Rs. 200 |
For self-occupied house- You can claim an income tax on home loan for reconstruction or renovation of your self-occupied house. This income tax deduction is available on the interest which you have to pay on your home loan and not on the principal amount of the loan. The amount of income tax deduction which you can claim is a maximum of Rs. 2 lakhs.
An income tax deduction of a maximum of Rs. 2 lakhs can be claimed if:
The home loan which you have taken is specifically for the reconstruction or repair of your house.
The home loan must have been taken on or after 1st April, 1999.
The reconstruction or repair of the house must be completed within a maximum period of five years from the date on which the home loan was taken.
You are eligible for an income tax deduction of Rs. 2 lakhs only if all of the above conditions are satisfied and your family or you yourself occupy the home.
If you do not satisfy any of the above conditions, you can still claim an income tax deduction of up to a maximum of Rs. 30,000 for a self-occupied house.
In order to claim this income tax deduction, you must have a certificate from the bank that gave you the home loan, which specifies why the loan has been taken and the interest that is payable on it.
For Rented house- If you are undertaking repair or reconstruction of a house which is not self-occupied but has been rented out, you can also claim an income tax deduction. The income tax deduction does not have a limit and will be for the entire amount of interest which is payable on your home loan.
If the house has more than one co-owner, they can claim the above income tax deductions separately and independently from each other.
If you have taken a loan for the purchase or construction of a house, you can claim an income tax deduction on the interest which is payable on the loan before the construction of the house begins. This income tax deduction is separate from the income tax deduction, which is available for the repair or reconstruction of a house. You can claim a total income tax deduction of Rs. 2 lakhs on the interest payable on the home loan.
This income tax deduction is a boon for Indian homeowners. Since the repair and reconstruction of a house can be expensive, such deductions are a boon. Repair and reconstruction of a house is a costly and inevitable affair, and the need for such a deduction is widely felt. It should be noted that such a deduction is not available for the installment of luxury fittings. This deduction is meant to help homeowners undertake necessary repair-work and renovation for their house.
