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Profession Tax is a direct tax which is levied on persons earning an income by way of either practicing a profession, employment, calling or trade. Unlike income tax which is levied by the Central Government, profession tax is levied by the government of a state or union territory in India. Majority but not all of the Indian states impose profession tax. While states like Karnataka and Maharashtra have profession tax, there is no such tax applicable in Delhi and Haryana.
• Professional tax is a tax on income charged by the State Government.
• The maximum limit of professional tax which can be levied on a person in a financial year is ₹ 2,500.
• Not all States and Union Territories charge P Tax, like; Haryana, Delhi, Uttar Pradesh, Rajasthan, etc.
• The slab of Professional Tax is different for each State which charges the tax.
• There are penalties imposed for late payment of tax, late filing of return and non-registration under the professional tax.
• For employees, the professional tax is deducted and submitted by the employer.
• An employer, whether company/partnership/sole proprietor is required to get a Professional Tax Registration Certificate as well as the Professional Tax Enrollment Certificate.
Profession Tax Rates in Key States of India
As this tax is a state subject, the rate of profession tax varies from one state to another. While some states might charge it as a percentage value, other states tend to charge it as a fixed amount based on income slabs. The following are the professional tax rates in key states in India:
State Income per Month Tax Rate/Tax Amount (p.m.)
Andhra Pradesh Less than Rs. 15,000 Nil
Rs. 15,000 to less than Rs. 20,000 Rs. 150
Rs. 20,000 and above Rs. 200
Gujarat Up to Rs. 5999 Nil
Rs. 6000 to Rs. 8999 Rs. 80
Rs. 9000 to Rs. 11999 Rs. 150
Rs 12000 and above Rs. 200
Karnataka Up to Rs. 15,000 Nil
Rs. 15,001 onwards Rs. 200
Kerala (Half yearly income slabs and half yearly tax payment) Up to Rs.11,999 Nil
Rs.12,000 to Rs.17,999 Rs.120
Rs.18,000 to Rs. 29,999 Rs.180
Rs.30,000 to Rs. 44,999 Rs.300
Rs.45,000 to Rs. 59,999 Rs.450
Rs.60,000 to Rs. 74,999 Rs.600
Rs.75,000 to Rs. 99,999 Rs.750
Rs.1,00,000 to Rs. 1,24,999 Rs.1000
Rs.1,25,000 onwards Rs.1250
Maharashtra Up to Rs. 7,500 Nil (for male)
Up to Rs. 10,000 Nil (for female)
From Rs. 7,500 to Rs. 10,000 Rs. 175 (for male)
Rs. 10,000 onwards Rs. 200 for 11 months + Rs. 300 for 12th month
Telangana Up to Rs. 15,000 Nil
Rs.15,001 to Rs.20,000 Rs. 150
Rs.20,001 onwards Rs.200
Up to 5 years (For professionals such as legal practitioners, CA, architects, etc.) Nil
Over 5 years (For professionals such as legal practitioners, CA, architects, etc.) Rs. 2,500 (per annum)
West Bengal Up to 10,000 Nil
10,001 to 15,000 Rs. 110
15,001 to 25,000 Rs. 130
25,001 to 40,000 Rs. 150
40,001 and above Rs. 200
Profession Tax Applicability
Profession tax is applicable on the following classes of persons:
- An Individual
- A Hindu Undivided Family (HUF)
- A Company/Firm/Co-operative Society/Association of persons or a body of individuals, whether incorporated or not
Who Pays Profession Tax?
Self-employed persons who carry out their profession or trade on their own and fall in the ambit of profession tax are liable to pay the tax themselves to the state government. The Commercial Taxes Department of a state/union territory is the nodal agency which collects profession tax on the basis of predetermined tax slabs which vary for each state and union territory. The tax is calculated on the annual taxable income of the individual, however, it can be paid either annually or monthly. Self-employed taxpayers need to obtain a Certificate of Enrolment from prescribed authority (of the concerned state) in the prescribed manner.
However, in case of salaried individuals and wage earners, the employer is liable to deduct profession tax from the employee’s salary on a monthly basis (as per the applicable professional tax slab) and deposit the same with the state government. The employer needs to get a Certificate of Registration from the concerned authority to be able to deposit the deducted profession tax.
Maximum Profession Tax Amount
A maximum of Rs. 2,500 can be levied as professional tax on any person per financial year.
Profession Tax Is Deductible Under Section 16 (iii) Of The Income Tax Act
According to Section 16 (iii) of the Income Tax Act 1961, the profession tax paid by an employee is allowed as a deduction from his/her gross salary income.
Major Indian States and Union Territories Which Levy Profession Tax
Following are some of the Indian states and union territories where professional tax is applicable:
I. Andhra Pradesh
II. Karnataka
III. Maharashtra
IV. Tamil Nadu
V. Assam
VI. Kerala
VII. Meghalaya
VIII. Tripura
IX. Bihar
X. Jharkhand
XI. Madhya Pradesh
XII. West Bengal
XIII. Manipur
XIV. Mizoram
XV. Odisha
XVI. Puducherry
XVII. Sikkim
XVIII. Telangana
XIX. Nagaland*
XX. Chhattisgarh
XXI. Gujarat
*According to the Nagaland Department of Taxes, professional tax is applicable in the state, however, other widely-followed publications there is no professional tax applicable in Nagaland.
Major Indian States and Union Territories Which Do Not Levy Profession Tax
Following are some of the Indian states and union territories where no professional tax is applicable:
I. Arunachal Pradesh
II. Himachal Pradesh
III. Delhi
IV. Haryana
V. Uttar Pradesh
VI. Uttarakhand
VII. Andaman and Nicobar Islands
VIII. Daman & Diu
IX. Dadra and Nagar Haveli
X. Lakshadweep
XI. Jammu & Kashmir
XII. Punjab
XIII. Rajasthan
XIV. Chandigarh
XV. Goa
How to pay Professional Tax?
Professional tax can be paid online on the professional tax website of the respective state. Professional tax needs to be paid by the last day of the month. E-filing is mandatory in case you are paying tax monthly. The necessary steps to make the payment for professional tax for each state is more or less similar.
Who is responsible for collecting and paying professional tax?
The collection of Professional tax is done by the Commercial Tax Department of a state. The tax collected is transferred to the funds of the municipal corporation.
When it comes to payment of professional tax, then for employees the tax is deducted and paid by the employer. However, employers, whether being a company, partnership firm or sole proprietor, is also carrying on a profession/trade. Therefore they are also required to pay professional tax as per the threshold specified by the state government. Since employers deduct and pay tax, they are also required to get both a professional tax registration certificate as well as professional tax enrolment certificate.
Freelancers are also required to get themselves registered as per the monetary threshold specified by the state government. However, various state governments have also defined scenarios in which case the professional tax is exempted. For example, professional tax is exempt for guardians or parents of blind people.
Consequences of violation of professional tax regulation
The penalty or late fee or interest for late payment of professional tax varies with each State. Besides, penalties can also be levied for non-registration. Along with penalty for late payment, there is also a penalty for late filing of return.
How to File a P Tax Return?
The procedure to file P tax returns for each state is more or less similar. Since the payment is being made every month, the return also needs to be submitted each month. Along with return, you also need to furnish the payment proof that the tax was submitted before the due date. For individuals, the professional tax has to be paid annually.
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