Professional Tax in India
What is Professional Tax?
Like any tax, professional tax is a source of revenue for the government. This is imposed at the state level in India. As with all other types of taxes, professional tax too has a standard slab according to which it is levied. Professional tax is a tax paid by all professionals and working individuals of companies falling under certain categories. This tax is compulsory and the amount paid towards professional tax is exempt from income tax.
Based on your salary or income levels, the tax is calculated and the same is deducted from your salary by your employers. As per Article 276, Constitution of India, maximum amount payable towards professional tax cannot exceed Rs.2400/-. This tax is payable to any one municipality, local board, district board, or any other legislative agency in the state for the Professions, Trades, Callings and Employments carried out in that particular state.
If this tax is not paid, the employer who has a certificate from the Government tax department is considered answerable.
Who all should Pay Professional Tax?
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As per the Professions, Trades, Callings and Employment Act 2000 passed by the government, professionals earning a particular monthly income or more are liable to pay professional tax. Professionals refer to people who are specialised professions like doctors; professionals in journalism, Information Technology, etc.
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State specific Profession Tax Rates
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The rate of professional tax levied varies from state to state in India. One must verify the prevailing tax rate of their particular state before paying the tax. As the tax slabs keep changing every year it is better to consult a Chartered Accountant or tax consultant before paying the tax.
Professional Tax slabs for some of the states are displayed below: For the state of West Bengal the slab table is shown below
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The professional tax slab for Delhi is as follows:
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Income
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Tax to be imposed
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Upto Rs.1,10,000
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Nil
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From Rs.1,10,000 To 1,45,000
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Nil
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From Rs.1,45,000 To 1,50,000
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10 %
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From Rs.1,50,000 To 1,95,000
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20 %
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From Rs.1,95,000 To 2,50,000
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20 %
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More than Rs.2,50,000
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30 %
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The professional tax slab for Tamil Nadu is as follows:
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Income
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Tax to be imposed
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Upto Rs.21000
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Nil
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From Rs.21001 to Rs.30000
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Rs.75
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From Rs.30001 to Rs.45000
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Rs.188
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From Rs.45001 to Rs.60000
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Rs.390
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From Rs.60001 to Rs.75000
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Rs.585
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More than Rs.75001
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Rs.810
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Rules Governing Professional Tax Payment:
There are certain rules governing the payment of professional tax. Some salient points to note:
- Companies engaged in hiring people for its trade have to apply for certificate of enrolment.
- This certificate has to be obtained within 30 days from the date of tax paying eligibility.
- Foreigners employed in these companies are not liable to pay professional tax.
- For every place of work, separate application needs to be submitted as per the requirement of the particular state where the place of work is situated.
- For individuals employed by any of the diplomatic offices or office of consulate, the professional tax has to be paid by the individuals as these offices need not get a certificate of registration.
Tax Penalty Rules
- Delay in payment of professional tax attracts penalty and therefore to avoid this penalty it is important to pay the tax on time.
- In fact a delay in obtaining enrolment is also penalised at the rate of Rs.2 per day. If the information that you provided at the time of enrolment is found to be incorrect or false, you have to pay a tax that is three times higher.
- Non-payment of tax or a late payment attracts 10% additional tax.
- If you file your returns late you can be penalised Rs.300/- per every late return filed.
Tax Exemption Categories:
There are a few categories and people and categories that get benefit of tax exemption:
- Senior citizens are exempt from professional tax.
- Parent of a mentally challenged child is exempt from this tax.
- Persons or parents of children suffering from physical disability are exempt from paying professional tax.
As is the case with all types of taxes, the rules governing professional tax may also vary from time to time. It is advisable to check the current rules from a tax consultant before paying the professional tax.
Contributed By: Aparna K S |
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Aparna has worked for Stock Holding Corporation of India Ltd (SHCIL). She has hands-on experience in various financial products. She also has expertise in various mutual funds, pension policies & other financial products. She is currently a freelance writer on various domains including finance | |
Kindly advise me about is there any recent circular issued by the Karnataka State regarding exemption for physically handicapped people.
Kindly guide us.
Income tax department web site automatically shows the Senior Citizen but in sales tax / professional web site is not like that. As such, please inform the concern department to update the same.
Regards,
TC Vishveshwara