Get salary accounts for your team See benefits
Get salary accounts for your team See benefits
Table of Contents
ToggleIf you’re a salaried employee, you’ve probably come across the term ‘professional tax’ on your payslips or Form 16. But do you really know what it is and why it’s deducted from your salary? Let’s shed some light on the subject and explore whether it only affects the salaried class.
Professional tax is a tax imposed on various professions, trades, and employment based on their income levels. It applies to employees, freelancers, professionals, and business owners whose income exceeds a specific threshold set by each state.
This tax is directly deducted from your gross salary by your employer, as it is levied and collected by the state government. The maximum amount charged is Rs 2,500, but the specific rates and slabs can vary from state to state.
Try our online CTC calculator now and get accurate results in seconds.
Professional tax differs from state to state because it is governed by each state’s individual laws and regulations. However, all states generally follow a slab system based on income levels to levy this tax. The Constitution (Article 276) empowers state governments to collect professional tax, but it also sets a maximum cap of Rs 2,500 that cannot be exceeded.
In this section, we’ll take a closer look at the states that collect professional tax. We’ll cover the different tax rates and the deadlines for making payments in each state.
Tax Deduction Period: Monthly
Monthly salary | Tax per month |
Up to Rs. 15,000 | Nil |
From Rs. 15,001 to Rs. 20,000 | Rs. 150 |
Rs. 20,001 and above | Rs. 200 |
Tax Deduction Period: Monthly
Monthly Salary | Tax Per Month |
Up to Rs. 12,000 | Nil |
From Rs. 12,000 and above | Rs. 200 |
Deadline for Paying Tax
The deadline for paying professional tax depends on when you receive your enrolment certificate. If you got your certificate before the start of the year or by August 31st, you need to pay the tax by September 30th of that same year. However, if you enrolled after August 31st, you have one month from your enrollment date to make your payment for that year.
Tax Deduction Period: Monthly
Monthly Salary | Tax Per Month |
Up to Rs. 25,000 | Nil |
From Rs. 25,000 and above | Rs. 200 |
Deadline for Paying Taxes
In Karnataka, all employers need to make sure they pay their taxes by the 20th of the following month. If they miss this deadline, the state government has the right to impose a fine that can be as much as 50% of the total amount owed. It’s important for employers to stay on top of these deadlines to avoid extra costs.
Tax Deduction Period: Every six months
Half-yearly Salary | Tax Per 6 Months |
Up to Rs. 11,999 | Nil |
From Rs. 12,000 to Rs. 17,999 | Rs. 120 |
From Rs. 18,000 to Rs. 29,999 | Rs. 180 |
From Rs. 30,000 to Rs. 44,999 | Rs. 300 |
From Rs. 45,000 to Rs. 59,999 | Rs. 450 |
From Rs. 60,000 to Rs. 74,999 | Rs. 600 |
From Rs. 75,000 to Rs. 99,999 | Rs. 750 |
From Rs. 100,000 to Rs. 124,999 | Rs. 1,000 |
Rs. 125,000 or above | Rs. 1,250 |
Deadline for Paying Professional Tax
In Kerala, professional tax is paid twice a year. The tax for the first half of the year, covering April to September, must be settled by August 31. For the second half, which runs from October to March, the payment is due by the end of February.
If employers fail to pay the professional tax on time, they can face a fine of up to ₹5,000. Additionally, for any late payments, there’s a penalty of 1% per month on the outstanding amount. It’s important for employers to stay on top of these deadlines to avoid fines and penalties.
Tax Deduction Period: Monthly
From Rs. 33,334Rs. 208 & 212*
Monthly Salary | Tax Per Month |
Up to Rs. 18,750 | Nil |
From Rs. 18,751 to Rs. 25,000 | Rs. 125 |
From Rs. 25,001 to Rs. 33,333 | Rs. 166 & 174* |
In Madhya Pradesh, professional tax is deducted from employees’ salaries based on their monthly earnings.
For those earning between Rs. 25,001 and Rs. 33,333, Rs. 166 is taken out of their pay for the first 11 months. In the final month, the deduction increases slightly to Rs. 174.
If an employee’s monthly income exceeds Rs. 33,334, the amount deducted is Rs. 208 for the first 11 months and Rs. 212 in the last month.
It’s important for employees to keep track of these deductions to understand how they affect their overall take-home pay.
Deadline for Paying Taxes
If an employer registers before the start of the year or by August 31, they need to make their tax payment by September 30 each year. For employers who register after August 31, the payment is due within 30 days of their registration date.
If payments are delayed, the tax authority may charge a fee of 2% each month on the total tax amount owed by the employer.
Tax Deduction Period: Monthly
Exemption: Females earning a salary up to Rs.10,000 are exempt from professional tax.
Monthly Salary | Tax Per Month |
Up to Rs. 7,500 | Nil |
From Rs. 7,501 to Rs. 10,000 | Rs. 175 |
Above Rs. 10,001 | Rs. 200 & 300* |
For employees who earn more than Rs. 10,001, a professional tax of Rs. 200 will be deducted each month for the first 11 months, and then Rs. 300 will be taken from their pay in the final month.
As for businesses, those that registered before the start of the year or by May 31 must pay their taxes for that year by June 30. If a business enrolls after May 31, they need to make their payment within 30 days of signing up.
Keep in mind that if payments are late, there will be a penalty of 10% on the total amount owed.
Tax Deduction Period: Every six months
Half-yearly Salary | Tax Per 6 Months |
Up to Rs. 21,000 | Nil |
From Rs. 21,001 to Rs. 30,000 | Rs. 100 |
From Rs. 30,001 to Rs. 45,000 | Rs. 235 |
From Rs. 45,001 to Rs. 60,000 | Rs. 510 |
From Rs. 60,001 to Rs. 75,000 | Rs. 760 |
Above Rs. 75,000 | Rs. 1,095 |
Deadline for Paying Taxes
If you pay salaries between April and September, you need to submit the professional tax by September 30. For salaries paid from October to March, the deadline is March 31. If you miss these deadlines, you’ll face a fine of 2% on the total amount due.
Tax Deduction Period: Monthly
Monthly Salary | Tax Per Month |
Up to Rs. 10,000 | Nil |
From Rs. 10,001 to Rs. 15,000 | Rs. 110 |
From Rs. 15,001 to Rs. 25,000 | Rs. 130 |
From Rs. 25,001 to Rs. 40,000 | Rs. 150 |
Above Rs. 40,001 | Rs. 200 |
Deadline for Paying Tax
In West Bengal, employers need to pay professional tax once a year. The payment must be made on or before July 31st of that same financial year. If the payment is late, a penalty of 1% on the amount owed will apply.
Your professional tax is calculated monthly based on your gross salary for that particular month. The tax is levied on the portion of your income after deducting items like EPF contributions, gratuity, leave deductions, or any past loans taken from your employer. This means that as your gross salary fluctuates, your professional tax amount will also vary accordingly.
Example:
If you are working in Maharashtra and earning Rs. 25,000 a month, a professional tax will be deducted of Rs. 200 per month for 11 months and Rs. 300 for the 12th month.
In the case of employees, the employer is responsible for deducting and paying professional tax to the state government, provided the employee’s income exceeds the specified threshold. Additionally, employers themselves, whether corporate entities, partnerships, or sole proprietorships, also need to pay professional tax on their businesses.
Freelancers who have no employees are also required to register and pay professional tax if their income exceeds the specified threshold. However, there are exemptions provided by some states for certain categories, such as parents or guardians of individuals with mental retardation.
Several categories of individuals are exempt from a professional tax deduction, including:
Making professional tax payments is convenient and can often be done online. Each state has its own official website for e-payment of professional tax.
To pay online, follow these general steps:
Failure to pay professional tax or register for it can result in penalties, which vary depending on the state’s legislation. Late registration can incur a daily penalty, while late payment may be subject to monthly interest. Non-payment or delayed payment of professional tax may also lead to additional penalties, making timely compliance crucial to avoid financial repercussions.
For example, in Maharashtra, the penalty for late registration is Rs 5 per day, with 1.25% monthly interest on late payments and a 10% penalty on the tax amount for non-payment or delay. Late return submissions may also attract a penalty of Rs. 1,000-2,000. Staying informed and fulfilling your professional tax obligations is essential to ensure a smooth and compliant financial journey.
Andaman and Nicobar Islands, Arunachal Pradesh, Chandigarh, Chhattisgarh, Dadra and Nagar Haveli, Daman and Diu, Delhi, Goa, Haryana, Himachal Pradesh, Jammu and Kashmir (prior to the reorganization), Ladakh (prior to the reorganization), Lakshadweep, Rajasthan, and Uttar Pradesh
Andhra Pradesh, Assam, Bihar, Gujarat, Jharkhand, Karnataka, Kerala, Madhya Pradesh, Maharashtra, Manipur, Meghalaya, Mizoram, Nagaland, Odisha, Puducherry, Punjab, Sikkim, Tamil Nadu, Telangana, Tripura and West Bengal
Yes, professional tax is deducted every month.
No, once professional tax is deducted, it is not eligible for a refund.
Yes, professional tax applies to freelancers as well.
Professional tax is a state-levied tax, not imposed by the central government. The mode of payment may vary from State to State.
In general, you can pay professional tax through both online and offline modes. Visit the official website of your relevant state for professional tax payments. For instance, if you reside in West Bengal, you need to log in to their official website: http://wbprofessiontax.gov.in/
Yes, professional tax is mandatory for salaried individuals, i.e., those who receive a regular salary for their work.
Professional tax is considered a deductible amount for the purpose of the Income Tax Act of 1961 and can be deducted from taxable income.
Priyanka Rao is a content strategist for Jupiter.Money, and specializes in writing on topics related to finance, banking, budgeting, salary & wages, and other financial matters. She has a passion for creating engaging content that resonates with audiences across various digital platforms. In her free time, Priyanka enjoys traveling and reading, which allows her to gain new perspectives and inspiration for her work. With a keen eye for detail and a creative mindset, Priyanka is committed to creating content that connects well with her readers, enhancing their digital experiences.
View all postsColin D'Souza is currently the Vice President of Banking Programs and Strategy at Jupiter Money, where he oversees the development and execution of key banking initiatives. With a strong background in retail banking, sales, and strategy, Colin brings extensive experience in driving business growth and enhancing customer engagement across various financial products and services. Before joining Jupiter, Colin was the Head of Corporate Salary Business at IDFC First Bank, having previously served as the Zonal Business Head for Retail Liabilities & Branch Banking. His leadership at IDFC First Bank focused on expanding the bank’s retail banking footprint and optimizing branch operations. Prior to that, he held senior roles at Citibank India, where he was Vice President and Regional Sales Head, responsible for the sales and distribution of consumer assets and liabilities, including services for high-net-worth individuals (HNI) and ultra-high-net-worth individuals (UHNI), as well as current accounts. Colin also served as Vice President and Regional Sales Manager at HSBC, leading retail liability acquisitions and driving business development for investment and insurance products. Earlier in his career, he managed a cluster of branches at CitiFinancial, where he was responsible for credit, risk, and P&L management. He holds a Post Graduate Diploma in Management from the Institute of Management Education and Research (IMER), adding a solid academic foundation to his professional expertise in banking and strategy.
View all postsPowerd by Issued by