What Is Professional Tax? How Much Does Professional Tax Cost?
What Exactly Is Professional Tax?
If you are a salaried professional with a regular income, you are required to pay a professional tax to your state government. Most states have a mechanism in place to handle professional tax, however others have opted out of this tax. However, because the state government manages this on its own, the rules vary between states. The only ruling touching the Central Government is the maximum cap they have proposed. As a professional tax, no state in India can collect more than ₹2,500 from an individual every year.
Do Only Professionals Need to Pay Professional Taxes?
While the phrase itself can be deceptive, this is not a tax that professionals must pay. Instead, it is a tax that all salaried professionals in India are required to pay. In India, the phrase encompasses everyone from basic employees to company entrepreneurs. However, the proportion they must pay is determined by the slab rates set by their individual state governments. Most salaried employees will discover that their monthly salary includes a professional deduction. This amount is determined by your principal pay, your profession, and the state in which you live. If you are a professional freelancer, you must pay your professional fee on a regular basis.
Professional Tax slabs in different states
The figure below shows all of the states and union territories’ imposed professional tax rates for 2019-20:
However, a few states, including Delhi and Haryana, have not imposed this tax.
Professional Tax in Maharashtra:
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) |
Professional Tax in Karnataka:
MONTHLY SALARY (IN RS.) | TAX (PER MONTH IN RS.) |
Up to 15,000 | Nil |
More than 15,000 | 200 |
Professional Tax in West Bengal:
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 |
Professional Tax in Madhya Pradesh:
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 |
Professional Tax in Tamil Nadu:
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 |
Professional Tax in Andhra Pradesh:
MONTHLY SALARY (IN RS.) | TAX (PER MONTH IN RS.) |
Up to 15,000 | Nil |
15,001 to 20,000 | 150 |
Above 20,000 | 200 |
Professional Tax in Gujarat:
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 |
Professional Tax in Odisha:
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 |
The following are the states and union territories where no professional tax is paid on its professionals:
- Arunachal Pradesh
- Andaman and Nicobar
- Dadra and Nagar Haveli
- Daman & Diu Delhi
- Haryana
- Jammu and Kashmir
- Lakshadweep
- Rajasthan
- Uttaranchal
- Uttar Pradesh
Conclusion
Professional tax is a type of tax applied by state governments in India on individuals who earn a living through work or a profession. It is levied to fund local government activities and services. The amount charged as professional tax varies by state and is determined on an individual’s income or wage bracket. Employers deduct the tax at the source and remit it to the appropriate state government. It is a legal requirement for professionals and employees, and failure to pay may result in penalties. Professional tax is an essential revenue stream for state governments and adds to the region’s overall growth.
