The fact that you have to pay a tax on your income is common knowledge for all individuals who have a source of income. However, the concept of professional tax is relatively obscured and not every taxpayer might know about what it is and when it is levied. So, let’s understand what professional tax is all about.

What is professional tax?

Professional tax is a tax that is levied if you earn an income. Though called professional tax, the tax is applicable for salaried, self-employed and professional taxpayers. So, whether you earn an income from salary, business or profession, a professional tax would be applicable to your income.

Who levies professional tax?

As per Article 246 of the Indian Constitution, the Parliament of India makes laws about the taxes payable on income. However, in the case of professional tax, the State Government frames the rules and levies professional tax in India. The concept of professional tax originated in the year 1949. At that time, the maximum professional tax levied on income was INR 250. However, in the year 1988, the limit of professional tax increased to INR 2500 per year. Currently, the maximum professional tax that States charge from taxpayers is capped at INR 2500.

Why does the rate of professional tax differ?

Since the rate of professional tax is levied by State Governments, each State charges a different rate of professional tax. As such, individual taxpayers in different States have a different professional tax applicable on their income.

Professional tax rates in different states

Every state has specific rules about the professional tax rates charged. The rates of some of the leading states of India are as follows –

State 

Professional tax rate 

Maharashtra 

Monthly salary of men up to INR 7500 – no tax

Monthly salary of women up to INR 10,000 – no tax

Monthly salary of men between INR 7500 and INR 10,000 – INR 175/month

Monthly salary above INR 10,000 – INR 200/month (INR 300 in February) 

Tamil Nadu

Monthly salary up to INR 21,000 – no tax

Monthly salary from INR 21,001 to INR 30,000- INR 100/month

Monthly salary from INR 30,001 to INR 45,000 – INR 235/month

Monthly salary from INR 45,001 to INR 60,000 – INR 510/month

Monthly salary from INR 60,001 to INR 75,000 – INR 760/month

Monthly salary above INR 75,000 – INR 1095/month

Karnataka 

Monthly salary up to INR 15,000 – no tax

Monthly salary above INR 15,000 – INR 200/month

Andhra Pradesh

Monthly salary up to INR 15,000 – no tax

Monthly salary from INR 15,001 to INR 20,000 – INR 150/month

Monthly salary above INR 20,000 – INR 200/month

Telangana 

Monthly salary up to INR 15,000 – no tax

Monthly salary from INR 15,001 to INR 20,000 – INR 150/month

Monthly salary above INR 20,000 – INR 200/month

Gujarat 

Monthly salary up to INR 5999 – no tax

Monthly salary from INR 6000 to INR 8999 – INR 80/month

Monthly salary from INR 9000 to INR 11,999 – INR 150/month

Monthly salary of INR 12,000 and above – INR 200/month

West Bengal

Monthly salary up to INR 8500 – no tax

Monthly salary from INR 8501 to INR 10,000 – INR 90/month

Monthly salary from INR 10,001 to INR 15,000 – INR 110/month

Monthly salary from INR 15,001 to INR 25,000 – INR 130/month

Monthly salary from INR 25,001 to INR 40,000 – INR 150/month

Monthly salary above INR 40,000 – INR 200/month

Who should collect and pay professional tax?

The Commercial Tax Department of each State is tasked with the responsibility to collect the professional tax from taxpayers. The department collects the tax and deposits it which, then, reaches the municipal corporation’s funds.

However, at the initial level, the duty to collect professional tax rests with the following entities –

  • For salaried employees, if their salary exceeds the specified threshold limit on which the professional tax is applicable, the employer should deduct the applicable tax from the salary of the employee and deposit it with the State Government
  • Businesses and self-employed individuals also need to pay a professional tax on their income. As such, they should register themselves and obtain a registration certificate for the professional tax payable. After the certificate is availed of, the tax can be paid by businesses. Moreover, businesses should also deduct the professional tax on their employees and submit the same to the State Government.
  • Professionals working on a freelancing basis should also obtain a registration certificate for paying professional tax. They should, then, pay professional tax on their income

What is the process to pay professional tax?

Depending on the rules formulated by the State Government, the process of paying professional tax is undertaken. Usually, states allow taxpayers to pay the tax online as well as offline. Moreover, as per the rules specified by States, you might need to file quarterly returns of the professional tax that you have paid. So, you should check the professional tax rules of your State to find out how you are expected to pay the tax on your income.

Implications of violations of professional tax rules

You are required to register for the payment of professional tax if your monthly income exceeds the threshold limit specified by the State Government. Moreover, the tax should be paid within specific deadlines as dictated by respective State Governments. If you do not register or pay the professional tax or if you fail to pay the tax within the due date, you might suffer penalties.

The actual amount of penal interest would depend on the violation rules specified by your State. The different States specify different penalties for non-compliance with the rules of professional tax. So, you should check with your State Government regarding the penalty payable.

Exemptions on professional tax

Though professional tax is a mandatory requirement, certain taxpayers are exempted from the payment of the tax. These exemptions include the following –

  • Parents or guardians whose children suffer from a mental or physical permanent disability
  • A taxpayer who himself suffers from a permanent physical disability, including blindness
  • Individual taxpayers who are aged 65 years and above
  • Individuals belonging to the Indian defence forces as specified by the Army Act, 1950, Air Force Act, 1950 and the Navy Act, 1952. Moreover, members of the auxiliary forces and reservists who are serving in the State are exempted from the payment of professional tax
  • Temporary workers who are engaged in the textile industry
  • Women who are working as agents under the Mahila Pradhan Kshetriya Bachat Yojana

Alternative methods to save your tax liability

Whether you are self-employed, run a profession, or are salaried, you would be liable to pay professional tax on your income. However, there are various ways in which you can reduce your tax liability. These ways are as follows –

  • Invest in suitable life insurance policies to claim a deduction under Section 80C of the Income Tax Act, 1961. The premiums paid for life insurance plans qualify as deductions from your taxable income. Moreover, the benefits received are also tax-free if specified conditions are fulfilled.
  • Invest in a suitable health insurance plan for yourself and your parents. Health insurance premiums also allow deductions under Section 80D. you can claim a maximum deduction of up to INR 1 lakh with health insurance premiums.
  • Invest in ELSS mutual fund schemes that qualify for deduction under Section 80C up to a limit of INR 1.5 lakhs
  • Invest in the NPS scheme which helps you plan a retirement corpus and also get additional tax benefits under Section 80CCD (1B) on investments up to INR 50,000
  • Buy your home and use a home loan to finance it. The principal repayment of the loan is allowed as a deduction under Section 80C while the interest payments give you tax benefits under Section 24(b) and Section 80EEA (subject to specific conditions).

So, understand the concept of professional tax, how it is levied and how to pay it. Pay your tax on time to avoid penalties and to fulfil your federal duty.


FAQ’s

Yes, salaried employees have to pay professional tax based on their respective State’s tax slabs. However, salaried employees can claim a deduction on their professional tax from the salary income.


No, all Indian States do not charge professional tax. Some states do not charge professional tax. These include the following –

  • Arunachal Pradesh
  • Himachal Pradesh
  • Andaman and Nicobar Islands
  • Ladakh
  • Jammu and Kashmir
  • Chhattisgarh 
  • Lakshadweep
  • Chandigarh 
  • Daman and Diu
  • Dadra and Nagar Haveli
  • Goa
  • Delhi
  • Haryana
  • Uttar Pradesh
  • Uttarakhand
  • Rajasthan

You can get the registration certificate on your State Government professional tax website.


Yes, usually, State Governments require you to register for a professional tax certificate within 30 days of starting a job or a business which would give you an income that is subject to professional tax.