Professional Tax (PT) is one of the statutory compliance requirements for businesses. Unlike TDS, EPF and ESI, PT is levied by the respective state governments. 

But there’s a catch! 

Not all Indian states impose professional tax. Also, the tax applicable to different income slabs may vary from one state to another, but it has a maximum limit of Rs 2,500 per year.

Let’s dig further to know the applicability of professional tax, the states where such tax is applicable, and how RazorpayX Payroll simplifies it for businesses.  

What is professional tax

Professional tax is a direct tax that applies to individuals earning an income by way of employment, practising their profession or trading. A practising professional includes a lawyer, teacher, doctor, chartered accountant, etc.  

The tax is deducted from the individual’s monthly salary by their employer and is deposited to the state governments. Professionals apart from salaried employees pay it directly to the government. 

Such professionals can claim a tax deduction for the PT paid during the financial year as per the Income Tax Act 1961.  

Who is responsible for deducting or paying professional tax

In case of a salaried employee, the employer must deduct PT from their salary every month and deposit it to the government. The employer needs to get a Registration Certificate from the concerned authorities to deposit the deducted tax. 

Whereas, the self-employed individuals who carry out their profession or trade and fall into eligibility criteria are required to pay the PT themselves to the state government. They need to obtain a Certificate of Enrolment from the concerned state’s prescribed authority. 

Every state/UT has a commercial tax department which collects professional tax based on predetermined income slabs. 

Professional tax registration and process

All employers must obtain PT registration within 30 days of employing individuals. In the case of other professionals, the registration must be obtained within 30 days from the start of their practice. 

If the employer has more than one office, then the registration must be obtained for each office depending on the respective state rules. 

It might be challenging for employers to catch hold of the registration process of all the states wherever PT is applicable. 

To ease the complexities of registration processes across states, we built RazorpayX Payroll

RazorpayX Payroll is an automated payroll software that takes care of everything payroll related right from salary disbursement to getting statutory compliance requirements right. The product also handles professional tax state-wise registrations for employers and saves a lot of valuable time.  

Professional Tax applicability across the states 

Here’s the list of states where PT is applicable along with tax amount: 

State Period of deduction Income slabs Tax amount
Andhra Pradesh Monthly Up to Rs 15,000 Nil
Rs 15,001 to Rs 20,000 Rs 150
More than Rs 20,000 Rs 200
Assam Monthly Up to Rs 10,000 Nil
Rs 10,001 to Rs 15,000 Rs 150
Rs 15,001 to Rs 25,000 Rs 180
More than Rs 25,000 Rs 208
Bihar Yearly Up to Rs 3 lakh Nil
Between Rs 3 lakh to Rs 5 lakh Rs 1,000
Between Rs 5 lakh to Rs 10 lakh Rs 2,000
Above Rs 10 lakh Rs 2,500
Jharkhand Yearly Up to Rs 3 lakh Nil
Between Rs 3 lakh to Rs 5 lakh Rs 1,200
Between Rs 5 lakh to Rs 8 lakh Rs 1,800
Between Rs 8 lakh to Rs 10 lakh Rs 2,100
Above Rs 10 lakh Rs 2,500
Gujarat Monthly Up to Rs 5999 Nil
Rs 6000 to Rs 8999 Rs 80
Rs 9000 to Rs 11999 Rs 150
More than Rs 12000 Rs 200
Karnataka Monthly Up to Rs 15,000 Nil
Above Rs 15,000 Rs 200
Kerala Half-yearly Up to Rs 11,999 Nil
Rs 12,000 to Rs 17,999 Rs 120
Rs 18,000 to Rs 29,999 Rs 180
Rs 30,000 to Rs 44,999 Rs 300
Rs 45,000 to Rs 59,999 Rs 450
Rs 60,000 to Rs 74,999 Rs 600
Rs 75,000 to Rs 99,999 Rs 750
Rs 1,00,000 to Rs 1,24,999 Rs 1,000
Above Rs 1,25,000 Rs 1,250
Madhya Pradesh Monthly Up to Rs 2,25,000 Nil
Between Rs 2,25,001 to Rs 3,00,000 Rs 1,500 (Rs 125 Per Month)
Between Rs 3,00,001 to Rs 4,00,000 Rs 2,000 (Rs 166 Per Month For 11 Months And Rs 174 For 12th Month)
Above Rs 4,00,001 Rs 2,500 (Rs 208 Per Month For 11 Months And Rs 212 For 12th Month)
Maharashtra Monthly Up to Rs 7,500 Nil
Between Rs 7,501 to Rs 10,000 Rs 175 (Nil for women)
Above Rs 10,000 Rs 200
Rs 300 (Employer has to deduct in the February month only)
Manipur Yearly Up to Rs 50,000 Nil
Rs 50,000 onwards to Rs 75,000 Rs 1,200
Rs 75,000 onwards to Rs 1,00,000 Rs 2,000
Rs 1,00,000 onwards to Rs 1,25,000 Rs 2,400
Above Rs 1,25,000 Rs 2,500
Meghalaya Yearly Up to Rs 50,000 Nil
Between Rs 50,001 to Rs 75,000 Rs 200
Between Rs 75,001 to Rs 1,00,000 Rs 300
Between Rs 1,00,001 to Rs 1,50,000 Rs 500
Between Rs 1,50,001 to Rs 2,00,000 Rs 750
Between Rs 2,00,001 to Rs 2,50,000 Rs 1,000
Between Rs 2,50,001 to Rs 3,00,000 Rs 1,250
Between Rs 3,00,001 to Rs 3,50,000 Rs 1,500
Between Rs 3,50,001 to Rs 4,00,000 Rs 1,800
Between Rs 4,00,001 to Rs 4,50,000 Rs 2,100
Between Rs 4,50,001 to Rs 5,00,000 Rs 2,400
Above Rs 5,00,001 Rs 2,500
Mizoram Monthly Up toRs 5,000 Nil
Between Rs 5,001 to Rs 8,000 Rs 75 (Assessee may pay in lump sum Rs 900 per annum)
Between Rs 8,001 to Rs 10,000 Rs 120 (Assessee may pay in lump sum Rs 1440 per annum)
Between Rs 10,001 to Rs 12,000 Rs 150 (Assessee may pay in lump sum Rs 1800 per annum)
Between Rs 12,001 to Rs 15,000 Rs 180 (Assessee may pay in lump sum Rs 2160 per annum)
Above Rs 15,001 Rs 208 (Assessee may pay in lump sum Rs 2500 per annum)
Nagaland Monthly Up to Rs 4,000 Nil
Between Rs 4,001 to Rs 5,000 Rs 35
Between Rs 5,001 to Rs 7,000 Rs 75
Between Rs 7,001 to Rs 9,000 Rs 110
Between Rs 9,001 to Rs 12,000 Rs 180
Above Rs 12,001 Rs 208
Odisha Yearly Up to Rs 1,60,000 Nil
Between Rs 1,60,001 to Rs 3,00,000 Rs 1,500
Above Rs 3,00,001 Rs 2,500
Puducherry Yearly Up to Rs 99,999 Nil
Between Rs 1,00,000 to Rs 2,00,000 Rs 250
Between Rs 2,00,001 to Rs 3,00,000 Rs 500
Between Rs 3,00,001 to Rs 4,00,000 Rs 750
Between Rs 4,00,001 to Rs 5,00,000 Rs 1,000
Above Rs 5,00,001 Rs 1,250
Punjab Monthly Above Rs 2,50,000 Rs 200
Sikkim Monthly Up to Rs 20,000 Nil
Between Rs 20,001 to Rs 30,000 Rs 125
Between Rs 30,001 to Rs 40,000 Rs 150
Above Rs 40,000 Rs 200
Tamil Nadu Monthly Up to Rs 21,000 Nil
Between Rs 21,001 to Rs 30,000 Rs 135
Between Rs 30,000 to Rs 45,000 Rs 315
Between Rs 45,001 to Rs 60,000 Rs 690
Between Rs 60,001 to Rs 75,000 Rs 1,025
Above Rs 75,000 Rs 1,250
Telangana Monthly Up to Rs 15,000 Nil
Between Rs 15,001 to Rs 20,000 Rs 150
Above Rs 20,001 Rs 200
Tripura Yearly Up to Rs 7,500 Nil
Between Rs 7,501 to Rs 15,000 Rs 1,800
Above Rs 15,001 Rs 2,496
West Bengal Monthly Up to Rs 10,000 Nil
Between Rs 10,001 to Rs 15,000 Rs 110
Between Rs 15,001 to Rs 25,000 Rs 130
Between Rs 25,001 to Rs 40,000 Rs 150
Above Rs 40,000 Rs 200

With RazorpayX Payroll, professional tax payments are also taken care of along with registrations. The product uses a direct deposit model similar to any payment wallet where the user maintains a balance. The payroll expenses are automatically deducted from such balance as on the respective due dates. 

It takes care of all the statutory payments such as PF, ESI, PT and TDS automatically and also their periodical returns. 

Suggested Read: Why Your Employees Need ESI

There is no need to spend time and manual efforts on maintaining employee records, their PT contribution, and payment to concerned authorities once a RazorpayX Payroll account has been set up. 

Set your RazorpayX Payroll account now

Here’s the list of states where PT is not applicable. 

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

What is the procedure to pay professional tax? Is any return to be filed? 

Professional tax is a state subject. There is no fixed procedure to pay professional tax. It can be paid either online or offline modes depending on the state from where the business is operating. 

Also, the intervals and procedure for filing professional tax returns depend on the State.

Consequences of violation of professional tax laws

The actual penalty depends on the respective State professional tax laws. Businesses might have to pay penalty, late fee or interest for non-registration, delay in tax payments and non-filing of returns within the specified due date. 

For instance, the Karnataka state government charges an interest of 1.25% per month for any late tax payments. Whereas, West Bengal charges 12% per annum. 

Exemptions 

The following individuals are exempt from paying professional tax: 

  1. Parents or guardians of children with a mental disability or permanent disability
  2. An individual suffering from a permanent physical disability including blindness
  3. Any individual of above 65 years
  4. Members of the forces as defined in the Air Force Act, 1950, the Army Act, 1950 and the Navy Act, 1957 including members of auxiliary forces or reservists, serving in the state
  5. Temporary workers employed in the textile industry
  6. Women exclusively engaged as agents under the Mahila Pradhan Kshetriya Bachat Yojana

The bottom line 

Any failure to obtain PT registration or depositing dues to the concerned authorities might land employers and professionals in trouble. Penalty/late fee or interest rates on late registrations or late payments are different for each state. 

With RazorpayX Payroll, you, as an employer, can avoid all such consequences. The product will take care of all your professional tax dues payment and their return filing on time; leaving no scope for default with statutory compliance requirements. 

Frequently Asked Questions (FAQs)

1. How is Professional Tax calculated?

Professional tax is calculated on the basis of predetermined slabs depending on the monthly or yearly salary. These slabs vary from state to state in India. Generally, it is Rs 200 per month provided the maximum PT in a financial year should not exceed Rs 2,500.

2. In which state Professional Tax is not applicable?

PT is not applicable in Arunachal Pradesh, Himachal Pradesh, Delhi, Haryana, Uttar Pradesh, Uttarakhand, Andaman and Nicobar Islands, Daman & Diu, Dadra and Nagar Haveli, Lakshadweep, Jammu & Kashmir, Punjab, Rajasthan, Chandigarh, Goa and Ladakh. 

3. Who is exempted from Professional Tax? 

  • An individual above 65 years of age
  • Members of the forces as defined in the Air Force Act, 1950, the Army Act, 1950 and the Navy Act, 1957 including members of auxiliary forces or reservists, serving in the state
  • Parents of children with a disability
  • An individual suffering from a permanent physical disability including blindness
  • Temporary workers working in textile industries

4. What is Professional Tax in Karnataka? 

The maximum amount of professional tax is Rs 2,400 in Karnataka. 

Monthly salary  Professional tax amount per month
Up to Rs 15,000 Nil
Rs 15,001 and above Rs 200

 

5. How do I get a professional tax certificate?

Professional tax certificate can be obtained by registering for it on the professional tax website of the respective state.

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