Professional Tax: 2023 Slab Rates, Exemptions & Applicability In India
Professional tax in India is levied on anyone who is employed. From professionals such as accountants, lawyers, etc. to traders and business persons. However, professional tax is applicable only if the income crosses a certain limit, just like Income Tax.
This post discusses professional tax in detail – what it is, professional tax slabs, exemption and the difference between income tax and professional tax. Read on!
What is Professional Tax?
It is a tax on your profession, trade, and employment among others, based on certain income limits. It is collected based on different income slabs. Furthermore, It is a token tax with a maximum limit of Rs. 2,500 across India.
Also Read: What Is Tax? What Are The Different Types of Taxes In India?
Who Levies & Collects Professional Tax in India?
As per article 276 of the Indian Constitution, the state government levies and collects it. Different states have passed their own Professional Tax Acts (PT Acts) which empower them to levy & collect this tax. The state governments collect PT through their tax departments.
In practice, employers deduct the tax every month from your salary and pay the state government taxation department. However, if you work as a freelancer or independently, you must pay the tax directly to the state government through the taxation department.
Professional Tax Applicability
Many states and union territories in India levy this tax based on different income criteria. If you are an employee of a company, you probably need to pay it unless the state government does not collect it. State governments also provide exemptions in some cases. Professional Tax is applicable on:
- All professionals such as lawyers, accountants, architects, etc.
- Small traders, business persons
- Hindu Undivided Family (HUF)
- A Company, firm, body of individuals, cooperative society or association of persons, whether incorporated or not.
Why is Professional Tax Different for Different People?
Professional tax is different for different people depending on the state of residence in India. Different states have different professional tax slabs. These tax slabs determine the amount of professional tax to be levied on people with a monthly source of income.
States & UTs That Do Not Levy Professional Tax
The below table has a list of states and UTs that do not levy this tax.
| States | Union Territories |
| Arunachal Pradesh | Andaman and Nicobar Islands |
| Himachal Pradesh | Daman & Diu & Dadar & Nagar Haveli |
| Uttar Pradesh | Delhi |
| Rajasthan | Chandigarh |
| Haryana | Lakshadweep |
| Uttarakhand | |
| Goa |
Note: The list is not exhaustive and is subject to change as per the state government’s rules and regulations.
Professional Tax Exemptions
Even though every eligible individual pays this tax based on the income slabs, certain categories of people are exempted.
- Parents or guardians of children with a mental disability or any permanent disability.
- Any person who is permanently physically disabled
- Individuals above 65 yrs. of age
For a detailed exemptions list, you must refer to state-specific rules and regulations as it varies from state to state.
Do you want to take a loan and save tax in the process? Learn more about exemptions under the Income-tax Act on taking a personal loan.
Also Read: Income Tax: Allowances, Exemptions And Deductions
Professional Tax Rates with Slabs for the Various Indian States
- Karnataka
| Monthly Salary | Tax per month |
| Up to INR 15,000 | Nil |
| Above INR 15,000 | INR 200 |
- Andhra Pradesh & Telangana
| Monthly Salary | Tax per month |
| Up to INR 15,000 | Nil |
| INR 15,001 to INR 20000 | INR 150 |
| Above INR 20000 | INR 200 |
- Maharashtra
| Monthly Salary | Tax per month |
| Up to INR 7500 for men | Nil |
| Up to INR 10000 for women | Nil |
| INR 7500 to INR 10000 | INR 175 |
| INR 10000 & above | INR 200 (INR 300 for February) |
Note: For other states’ tax rates & slabs, refer to respective state government notifications.
Difference Between Income Tax and Professional Tax
Have you ever wondered whether Income tax is the same as professional tax? The major differences between the two are:
| Income Tax | Professional Tax |
| Income tax is a tax on your income from various sources such as salary, rent, fees, interest, etc. | Anyone who engages in any activity such as trade, employment, or profession such as a lawyer, accountant, etc has to pay professional tax. |
| The central government decides income tax rates & slabs every year. | The state governments decide professional tax rates and slabs. |
| Income tax slabs & rates are uniform across India. | Professional tax slabs & rates differ from state to state. |
Tax Saving & Professional Tax
The Income Tax Act, 1961 allows professional tax paid by you as a deduction from your total salary income. So, you should take advantage of this provision and reduce your professional tax from your total salary income and save tax.
For example, your total salary is Rs. 1,00,000 and you have paid Rs. 2500 as professional tax. In this case, you can reduce Rs. 2500 from your total salary of Rs. 1,00,000.
Violation of Professional Tax Regulation
Once a professional tax is applicable, a penalty amount can be levied in States across India for not registering. The amount will depend and vary from state to state. A penalty could be levied for not filing the returns and failing to pay the amount within the due date.
Also Read: Income Tax Return Filing: Due Dates And Penalties
Final Word
Paying professional tax is an obligation for all eligible persons. It is important to learn about taxes applicable in India. One must know majorly two things to comply with the professional tax norms-Tax slabs and rates in the working state and mode of payment. Pay your professional tax on time and file for returns to avoid penalty.
FAQs on Professional Tax
Ans: The tax can be paid online or offline for freelance professionals and other independent income earners as per the state government’s facilities. Certain states even require you to file professional tax returns. It can be done online through state government portals.
Ans: Professional tax is not applicable in Union Territories as these regions are small and the income is lower compared to other states in India.
Ans: Yes, it is mandatory to pay professional tax if it is applicable and the earning is over a certain limit.
Disclaimer
This article is solely for educational purposes. Navi doesn't take any responsibility for the information or claims made in the blog.
Read More on Income Tax Act
