Professional tax is a tax that is levied by a state government on all individuals who earn a living through any medium. This should not be confused with the definition of professionals that indicates people such as doctors.
This is a tax that is to be paid by every single earning individual. The calculation and amount collected may differ from one state to another but it has a limit of Rs. 2500 per year.
Who are the Professional Taxpayers?
The following are the individuals who are liable to pay Professional Tax:
- Salary or wage holders
- Members of HUFs (Hindu Undivided Families)
- Earning individuals residing within boundaries and
- An association of a body or person, public or private limited company, any cooperative society, and others
Who Collects Professional Tax?
Professional tax is collected by the employers from the monthly salaries and the Commercial Tax Department is responsible for collecting this tax.
It is then paid by them to the government failing which they can have penalties imposed on them for not collecting or failing to pay the professional tax. If you are not working for anyone then you are liable to pay the professional tax yourself.
- For professionals not working with an employer they can register for it by applying through a form.
- Once the form is received, a registration number will be issued to the individual.
- Payment of the professional tax can be made under these registration numbers at banks.
- It is also worth noting that, in some states, the government also provides rebates on the taxes if it is paid in a lump sum for a few years together so it is worth enquiring about the rules of professional tax in your state.
The following are the two specific certificates that employers need to register for to pay and charge taxes:
- Professional tax enrolment certificate: For clearing the liabilities with the state government, the professional tax enrolment certificate authorises the employer to deduct professional tax from the employees’ salaries.
- Professional tax registration certificate: The professional tax registration certificate certifies the employer to pay professional tax on their trade or business.
What is the Professional Income Tax Limit?
In 1949, the professional tax was introduced, and the limit of tax was set Rs.250. The limit was increased by Rs.2,500 in 1988 and the professional tax amount cannot exceed Rs.2,500. The tax amount depends on the state of employment and the income slab of the employee.
Professional Tax Applicability
Professional Tax is applicable for the below-mentioned individuals and entities:
- Companies
- Firms
- LLPs
- Corporation
- Societies
- HUF
- Associations
- Clubs
- Legal practitioners such as solicitors
- Contractors
- Architects
- Engineers
- Insurance agents
- Chartered Accountants
- CS
- Surveyors
- Tax consultants
- Management consultants
- Medical representatives such as doctors, medical consultants, and dentists.
Professional Tax in Maharashtra
Professional tax rate slabs in Maharashtra are as follows:
| Monthly salary (in Rs.) | Tax (in Rs. Per month) |
| Up to Rs.7,500 for men | Nil |
| Up to Rs.10,000 for women | Nil |
| Rs.7,501 to Rs.10,000 | Rs.175 |
| Rs.10,000 and above | Rs.200 for 12 months and Rs.300 for the last month |
Due Date for Professional Tax Payment in Maharashtra
The Maharashtra professional tax payment deadline is determined by the date of enrollment. So for organisations that signed up before May 31 of a given fiscal year are required to pay Professional Tax by June 30 of that same year and for organisations that enrolled after May 31 of a given fiscal year are required to pay Professional Tax within one month of the enrollment date.
Employers who fail to pay professional tax on time or postpone doing so must pay 2% interest per month on the total amount owed.
Professional Tax in Karnataka
Professional tax rate slabs in Karnataka are as follows:
| Monthly salary (in Rs.) | Tax (in Rs. Per month) |
| Up to Rs.14,999 | Nil |
| More than 15,000 | Rs.200 |
Due Date and Penalty for Paying Professional Tax in Karnataka
Each year, professional tax must be paid by all employers and businesses in Karnataka with enrollment certificates by the tax slab’s deadline of 30 April, or they must pay a late payment penalty of 1.25% per month.
Professional Tax in West Bengal
Professional tax rate slabs in West Bengal are as follows:
| Monthly salary (in Rs.) | Tax (in Rs. Per month) |
| Up to Rs.10,000 | Nil |
| Rs.10,001 to Rs.15,000 | Rs.110 |
| Rs.15,001 to Rs.25,000 | Rs.130 |
| Rs.25,001 to Rs.40,000 | Rs.150 |
| More than Rs.40,000 | Rs.200 |
Due Date and Penalty for Professional Tax Payment in West Bengal
Professional tax in West Bengal must be paid online by enrolled individuals by July 31 of each fiscal year, or earlier. However, registered employers are required to pay a monthly fee. The West Bengal State Government fines people and businesses if there is a delay in professional tax payment, or a professional tax return is not filed within 90 days of the eligibility date.
Concerned people/companies are required to pay interest at a monthly rate of 1% on unpaid tax as a result of late payment.
Professional Tax in Madhya Pradesh
Professional tax rate slabs in Madhya Pradesh are as follows:
| Monthly salary (in Rs.) | Tax (in Rs. Per month) |
| Up to Rs.18,750 | Nil |
| Rs.18,751 to Rs.25,000 | Rs.125 |
| Rs.25,001 to Rs.33,333 | Rs.167 |
| Rs.33,334 and above | Rs.208 for 11 months and Rs.212 for the last month |
Due Date and Penalty for Paying Professional Tax in Madhya Pradesh
The government of Madhya Pradesh imposes Rs.208 for the first 11 months of a fiscal year and Rs.212 for the final month of a fiscal year, especially for people whose salaries or income exceed Rs.15,000.
On the other hand, people who are not employees are required to pay Professional tax annually. The dates change based on when professional taxes are registered. A person must pay Professional tax before the 30th September of a given fiscal year if they register before the start of the fiscal year or before the 31st August of that year.
Employers (on behalf of employees) and self-employed people are responsible for paying Professional tax on time or face a penalty of 2% per month of the total amount owed. The penalty can increase to as much as two-thirds (2/3) of the total amount of tax owed.
Professional Tax in Tamil Nadu
Professional tax rate slabs in Tamil Nadu are as follows:
| Monthly salary (in Rs.) | Tax (in Rs. Per month) |
| Up to Rs.3,500 | Nil |
| Rs.3,500 to Rs.5,000 | Rs.22.5 |
| Rs.5,001 to Rs.7,500 | Rs.52.5 |
| Rs.7,501 to Rs.10,000 | Rs.115 |
| Rs.10,001 to Rs.12,500 | Rs.171 |
| Above Rs.12,500 | Rs.208 |
Due Date and Penalty for Professional Tax Payment in Tamil Nadu
Professional tax payments are due on April 1 and October 1 of each respective half-year. Employers and individuals who miss a payment deadline for Professional tax are subject to a 2% monthly penalty.
A 10% additional penalty will be assessed for Professional tax non-payment. Employers and individuals are responsible for paying a penalty equal to three times the amount of tax that is owed if they provide false or inaccurate information.
Professional Tax in Andhra Pradesh
Professional tax rate slabs in Andhra Pradesh are as follows:
| Monthly salary (in Rs.) | Tax (in Rs. Per month) |
| Up to Rs.15,000 | Nil |
| Rs.15,001 to Rs.20,000 | Rs.150 |
| Above Rs.20,000 | Rs.200 |
Due Date and Penalty for Paying Professional Tax in Andhra Pradesh
In Andhra Pradesh, the certificate of enrolment determines the due dates for professional tax. People have to pay professional tax by 30 June of the fiscal year. So, if a person receives their enrollment certificate on or before 31 May they are required to pay the professional tax within a month of the day of enrollment in this case.
In the state of Andhra Pradesh, if someone doesn’t pay their PT on time, they must pay a penalty that must be between exactly 25% and 50% (not less or more) of the tax that is due for payment.
Professional Tax in Gujarat
Professional tax rate slabs in Gujarat are as follows:
| Monthly salary (in Rs.) | Tax (in Rs. Per month) |
| Up to Rs.5,999 | Nil |
| Rs.6,000 to Rs.8,999 | Rs.80 |
| Rs.9,000 to Rs.11,999 | Rs.150 |
| Rs.12,000 and above | Rs. 200 |
Due Date and Penalty for Professional Tax Payment in Gujarat
Both monthly and quarterly payments and collections are made for professional taxes. The employer and/or the business owners must pay the sum within 15 days of the following month (if a company has fewer than 20 employees).
For business employs with more than 20 people, the employer or business owner may pay the Professional Tax in Gujarat on a quarterly basis, i.e., prior to the 15th of the month following the end of the quarter. Keep in mind that the employer or business owner in each case must make the payment within 15 days of the end of the preceding quarter.
Individuals who don’t pay professional tax are subject to a late payment fee and daily interest calculated at a rate of 18% of the total amount due per year.
Professional Tax in Odisha
Professional tax rate slabs in Odisha are as follows:
| Monthly salary (in Rs.) | Tax (in Rs. Per month) |
| Up to Rs.13,304 | Nil |
| Rs.13,305 to Rs.25,000 | Rs.125 |
| Rs.25,001 and above | Rs.200 for each month except February and Rs.300 February |
Due Date and Penalty for Professional Tax Payment in Odisha
Professional tax in Odisha must be paid before June 30th for individuals who registered on or before May 31 of the fiscal year in question. Individuals who enrolled after May 31st, however, are required to pay Professional tax within a month of the enrollment date.
A simple interest charge of 2% (per month) of the tax (amount due) or a portion of the unpaid tax period may be applied if professional tax is not deducted or paid. Additionally, non-payment of Professional tax without a valid reason may result in a penalty of 25%- 50% of the entire value owed, plus interest charges.
Why is Professional Tax different for Different States?
Since it is a tax that is levied by the state government, it tends to differ from one state to another.
- Each state has a slab that it declares and the professional tax is deducted based on these slabs. Some states and union territories do not charge professional tax too.
- How it is paid is by dividing the annual professional tax due into 12 equal installments that are paid every month, except the one paid in February which is higher than the other months.
- There may also be situations where sources of income falling under different sectors will also be liable for a separate tax.
For example, in some states, a person running a business in the transport sector may be required to pay a professional tax of about Rs.50 per annum for each of the vehicles owned and it may be subject to a cap of Rs.1,000 per annum.
The following is the list of states and Union Territories where Professional Tax is applicable and where it is not applicable:
The list of states where Professional Tax is Applicable:
- Jharkhand
- West Bengal
- Odisha
- Bihar
- Madhya Pradesh
- Assam
- Tripura
- Nagaland
- Meghalaya
- Sikkim
- Manipur
- Mizoram
- Andhra Pradesh
- Chhattisgarh
- Tamil Nadu
- Kerala
- Maharashtra
- Telangana
- Karnataka
The list of states where Professional Tax is Not Applicable:
- Himachal Pradesh
- Uttar Pradesh
- Arunachal Pradesh
- Chandigarh
- Jammu & Kashmir
- Uttarakhand
- Delhi
- Haryana
- Punjab
- Rajasthan
- Goa
- Daman & Diu
- Dadra & Nagar Haveli
- Andaman & Nicobar Islands
- Lakshadweep
Exemption in Professional Tax
The below-mentioned individuals need not pay Professional Tax:
- Individuals who run educational institutions that teach classes up to twelfth standard.
- Individuals in the Central Para Military Force (CPMF).
- An individual who has one child and has undergone a sterilization operation. However, the relevant documents must be submitted.
- Any ex-serviceman who comes under SI No.1 (Schedule)
- Any handicapped individual who has at least a 40% disability. However, the relevant certificate must be submitted.
- Individuals who have a permit for a single three-wheeler or a single taxi to carry goods.
- Deaf, dumb, and blind individuals who are earning a salary.
- Civilian non-combatant and combatant members who are part of the Armed Forces. However, the Army Act must govern the Armed Forces.
- Foreign technicians who have been employed by the state.
- All philanthropic and charitable hospitals that are present in places that come under below taluk level.
How to fill in the Professional Tax Application form?
The following are the steps to fill the professional tax application form:
- Visit the official website of Professional Tax i.e. http://pt.kar.nic.in
- Click on ‘Enrolment Application’ on the left-hand side of the page
- Select ‘New’, if you are paying professional tax for the first time
- Select ‘Enrolled’, if you have filed tax returns earlier
- Enter the required details, such as:
- Financial year
- Professional tax office
- Type of return
- Business status
- Class of person
- Click on ‘Next’
- Make the payment through credit card, debit card, or net banking
- Download the receipt after making the payment
Consequences of Violation of Professional Tax Regulation
The following are the consequences of violating professional tax regulations:
- Once professional tax legislation becomes applicable, not registering for professional tax may levies penalty and the amount depends on the respective state’s legislation.
- Failing to make payment and file the return within the specified due date may also levies penalty.
Note:
- Penalty for late registration of professional tax in Maharashtra Rs.5 per day.
- Monthly interest rate for late payment is 1.25%
- For non-payment or delay of professional tax, penalty of 10% on the tax amount will be levied
- For late return submission, a penalty amount charged ranges between Rs.1,000 to Rs.2,000
FAQs on Professional Tax
- How is the professional tax determined?Your salary and predetermined slabs are used to calculate a professional tax. You may be required to pay anywhere from 200 to 2500 per month.
- Is there any professional tax for Union Territory?Unlike income tax, professional tax is governed by the state government. As the Union Territories are administered by the Central Government, they are exempt from paying professional tax.
- Do I need to pay professional tax if I am a freelance professional?Yes, even if you are a freelance professional, you need to pay professional tax as this applicable for all professionals.
- I have some queries related to my professional tax. What should I do?In case of any query related to your professional tax, you can get in touch with the control room which operates 24×7 by calling on any one of the numbers 080-22208401/080-22342689/080-22252258.
- Why are professional tax different for different states and union territories in Inda?The professional tax is levied by the state government and differs since every state has its own slabs that it declares. Hence, the professional tax differs from one state to another.
- Why is professional tax not applicable for Union Territories?Union Territories are generally small regions and is governed by the central government. Since these regions are small, they tend to generate lower revenue and hence they are exempted from paying the professional tax.
- Is it mandatory to pay professional tax?If you are a salaried individual, then it is compulsory for you to pay the professional tax.
- Does Tamil Nadu deduct professional tax on a monthly basis?No, professional tax is not deducted every month in Tamil Nadu. The professional tax must be deducted from employees’ salaries in August and January.
- What is the penalty if you miss paying Karnataka Professional Tax?People in Karnataka who miss paying professional tax are subject to late payment penalties of 1.25% per month if they don’t do so within the allotted time.
- What is the Karnataka professional tax salary cap?According to the Karnataka Tax on Professions, Trades, Callings and Employments Act of 1976, people who make Rs.10,000 or more a month are required to pay the professional tax.
- When is the Karnataka Professional Tax Payment due date?Every year, before the 30th of April, all employers and businesses in Karnataka with enrollment certificates are required to pay professional tax in accordance with the applicable tax slab.
- Who is not required to pay professional tax?Several groups are exempt from paying professional tax, including senior citizens (above 65 years), people with physical disabilities, parents or guardians of disabled children, embers of the Navy, Air Force, Army, and other auxiliary forces who serve the state and the country.