An overview on Professional Tax in INDIA

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Profession tax the tax by the state governments in India. A person earning an income from salary or anyone practicing a profession such as chartered accountant, company secretary, lawyer, doctor etc. are required to pay this professional tax. Different states have different rates and methods of collection. In India, profession tax is imposed evel. However, not all states impose this tax.

The states which impose professional tax are Punjab, Karnataka, Bihar, West Bengal, Andhra Pradesh, Telangana, Maharashtra, Tamil Nadu, Gujarat, Assam, Kerala, Meghalaya, Odisha, Tripura, Madhya Pradesh, and Sikkim. Business owners, working individuals, merchants and people carrying out various occupations come under the purview of this tax.

Profession tax is levied by particular Municipal Corporations and majority of the Indian states impose this duty. It is a source of revenue for the government. The maximum amount payable per year is INR 2,500 and in line with tax payer’s salary, there are predetermined slabs.

It is also payable by members of staff employed in private companies. It is deduced by the employer every month and sent to the Municipal Corporation. It is mandatory to pay professional tax. The tax payer is eligible for income tax deduction for this payment.

The professional tax is a slab-amount based on the gross income of the professional and salaried and as well as the other states as may be decided employee’s. It is deducted from salary of the employee every month. Slab for professional tax varies across different states in India.

The owner of a business is responsible to deduct professional tax from the salaries of his employees and pay the amount so collected to the appropriate government department. He/she has to furnish a return to the tax department in the prescribed form within the specified time.

Professional tax registration application must be to the State’s tax department within 30 days of employing staff in a business. If there is more than one place of work, application must be made separately to each authority as regards the place of work coming under the jurisdiction of that authority day.

 In case of non/late payment of profession tax, penalty will be 10% of the amount of tax. In case of late filing of returns, a penalty of Rs. 1000 per return will be imposed if you filed after due date in 1 month. After 1 month, a penalty of Rs. 2000 will be imposed. Delays in obtaining Registration Certificate, a penalty of Rs. 5/- per.


  • Founder and Editor at "Knowledge"

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