Professional Tax in India

Professional Tax is a state-level tax imposed on individuals earning income through salary, profession, trade, or employment. Despite the term "professional," the tax is not limited to professionals like doctors or lawyers—it covers salaried individuals, freelancers, traders, consultants, and anyone engaged in a business or occupation.

While professional tax is governed by the respective state governments, it is authorized under Article 276 of the Constitution of India. The maximum amount that any state can levy as professional tax is ₹2,500 per year.

Let’s explore the key aspects, rates, applicability, registration process, exemptions, penalties, and benefits of professional tax in India.

What Is Professional Tax?

Professional tax is a direct tax levied by state governments on income earned by way of profession, employment, or business. It is applicable to both salaried employees and self-employed individuals. It is collected by the Commercial Tax Department of the respective state and is ultimately deposited into the state’s treasury.

It is important to note that not all states in India levy professional tax.

Who Is Liable to Pay Professional Tax?

Salaried Employees

In the case of salaried individuals, professional tax is deducted by the employer every month and deposited with the state government. Employers are required to obtain a Professional Tax Registration Certificate (PTRC) to deduct and pay this tax.

Self-Employed Professionals

Professionals such as doctors, chartered accountants, lawyers, architects, and other independent practitioners are also liable to pay professional tax. They must obtain a Professional Tax Enrollment Certificate (PTEC) and pay tax directly to the government.

Businesses and Firms

Businesses, whether sole proprietorships, partnerships, LLPs, or companies, must pay professional tax on behalf of their directors, partners, and employees (if applicable).

Who is Responsible for Collecting Professional Tax?

In the case of salaried employees, it’s the employer who takes care of deducting professional tax from the salary every month. Once deducted, this amount is submitted to the State’s Commercial Tax Department. The responsibility for collecting and managing professional tax rests with this department in states where the tax is applicable. Eventually, the collected revenue is passed on to local municipal bodies to support civic infrastructure and services.

Professional Tax Rates

The rate of professional tax varies from state to state, as it is determined by each state government. Every state has its own set of rules and guidelines for applying professional tax. However, a common feature across all states is the income-based slab system used to calculate and levy professional tax.

Professional Tax Rate in Maharashtra

Professional Tax Rate in Karnataka

Professional Tax Rate in West Bengal

Professional Tax Rate in Andhra Pradesh

Professional Tax Rate in Tamil Nadu

Professional Tax Rate in Gujarat

Professional Tax Rate in Kerala