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  • Professional Tax

    If you ever take a look at your payslips you will notice that there is a small deduction mentioned along with all the HRA, conveyance and basic salary break ups. This deduction is generally to the tune of Rs. 200 or so and is called the professional tax. This tax is generally different for each state and in certain place you may notice that there is no deduction made under this heading. So the question is, “What is professional tax?”

    What is Professional Tax?

    Professional tax is a tax that is levied by a state government on all individuals who earn a living through any medium. This should not be confused with the definition of professionals that indicates people such as doctors. This is a tax that is to be paid by every single earning individual. The calculation and amount collected may differ from one state to another but it has a limit of Rs. 2500 per year.

    Why is it different for different people?

    Since it is a tax that is levied by the state government, it tends to differ from one state to another. Each state has a slab that it declares and the professional tax is deducted based on these slabs. There are some states and union territories that do not charge professional tax too. How it is paid is by dividing the annual professional tax due into 12 equal installments that are paid every month, except the one paid in February which is higher than the other months.

    There may also be situations where sources of income falling under different sectors will be also be liable for a separate tax. For example, in some states, a person running a business in the transport sector may be required to pay a professional tax of about Rs. 50 per annum for each of the vehicles owned and it may be subject to a cap of Rs. 1,000 per annum.

    Who Collects Professional Tax?

    Professional tax is collected by the employers from the monthly salaries. It is then paid by them to the government failing which they can have penalties imposed on them for not collecting or failing to pay the professional tax. If you are not working for anyone then you are liable to pay the professional tax yourself.

    For professionals not working with an employer they can register for it by applying through a form. Once the form is received, a registration number will be issue to the individual. Payment of the professional tax can be made under these registration numbers at banks. It is also worth noting that, in some states, the government also provides rebates on the taxes if it is paid in a lump sum for a few years together so it is worth enquiring about the rules of professional tax in your state.

    Professional Tax Slabs in Various States:

    Since each state tends to have its own slab for professional taxes, here are the slabs for various states and union territories in India.

    Professional Tax in Maharashtra:

    Monthly salary (in Rs.) Tax (in Rs. Per month)
    Up to 7,500 for men Nil
    Up to 10,000 for women Nil
    7,500 to 10,000 175
    10,000 and above 200 (except February when its 300)

    Professional Tax in Karnataka:

    Monthly salary (in Rs.) Tax (in Rs. Per month)
    Up to 15,000 Nil
    More than 15,000 200

    Professional Tax in West Bengal:

    Monthly salary (in Rs.) Tax (in Rs. Per month)
    Up to 8,500 Nil
    8,501 to 10,000 90
    10,001 to 15,000 110
    15,001 to 25,000 130
    25,001 to 40,000 150
    More than 40,000 200

    Professional Tax in Madhya Pradesh:

    Annual salary (in Rs.) Tax (in Rs. Per month)
    Up to 1.5 lakhs Nil
    1.5 lakhs to 1.8 lakhs 125
    1.8 lakhs and above 212

    Professional Tax in Tamil Nadu:

    Half yearly salary (in Rs.) Tax (in Rs. Per 6 month)
    Up to 21,000 Nil
    21,001 to 30,000 100
    30,001 to 45,000 235
    40,001 to 60,000 510
    60,001 to 75,000 760
    75,001 and above 1095

    Professional Tax in Andhra Pradesh:

    Monthly salary (in Rs.) Tax (in Rs. Per month)
    Up to 15,000 Nil
    15,001 to 20,000 150
    Above 20,000 200

    Professional Tax in Gujarat:

    Monthly salary (in Rs.) Tax (in Rs. Per month)
    Up to 5,999 Nil
    6,000 to 8,999 80
    9,000 to 11,999 150
    12,000 and above 200

    Professional Tax in Odisha:

    Monthly salary (in Rs.) Tax (in Rs. Per month)
    Up to 5,000 Nil
    5,001 to 6,000 30
    6,001 to 8,000 50
    8,001 to 10,000 75
    10,001 to 15,000 100
    15,001 to 20,000 150
    Above 20,000 200

    News About Professional Tax

    • Bengal Finance Minister Proposes No New Taxes For 2016-17 Budget

      Finance Minister of West Bengal, Amit Mitra, proposed on Friday that no new taxes would be levied while hiking the Plan Expenditure to Rs 57,905 crore. The proposal was mooted following the actual Plan Expenditure had surpassed the expected figure last year. He stated that the aim of the Plan Expenditure hike for 2016-17 was to continue to work for the financial and social development of the people of Bengal, especially for those in financially and socially backward sectors. The Finance Minister also proposed that the exemption limit for professional tax be raised from Rs. 8.500 per month to Rs. 10,000 per month in order to give some sort of relief to employees and wage earners.

      4th July 2016

    • Diamond Units threaten to shut down due to Professional Tax Campaign

      In a response to the campaign started by the Surat Municipal Corporation (SMC) to collect professional tax, small diamond producers and manufacturers in Varachha, Katargam and Mahidharpura have warned that their units will shut shop in direct opposition to the move. With twenty four units already shut down in Varachha over the last few days after receiving notices, the diamond manufacturers have held talks with the Surat Diamond Association (SDA) and the Gems and Jewellery Export Promotion Council (GJEPC) to come to a resolution regarding the professional tax issue. According to sources, the SMC has targeted a collection of Rs 75 crore in professional taxes solely from the diamond industry.

      29th March 2016

    • Possible Revision of Professional Tax in Karnataka

      In purview of the tax rules that have been active, the Chief Minister of Karnataka, Siddaramaiah proposed an increase in the professional tax ceiling to the finance minister Mr. Arun Jaitley.

      As per Siddaramaiah, professional tax ceiling of INR 2500 annually is too less, and has remained unchanged since 28 years. The current proposal, if accepted might hike the professional tax to INR 12000 annually.

      17th March 2016

    • New Professional Taxes by South Delhi Municipal Corporation to cover deficit

      Since its inception three years ago, the South Delhi Municipal Corporation (SDMC) has declared its first ever budget deficit. The SDMC aims to cover this deficit by proposing more taxes to be levied on the people, instead of discovering why there was suddenly a deficit in a civic body that was running profitably for a long time. The SDMC commissioner Punit Kumar Goyal also plans to cut old-age pensions in FY 2016-2017.

      Even despite the proposed 1 to 2 percent hike in property taxes, and the imposition of professional tax, the proposed budget estimates for FY 2016-2017 show a Rs.200 crore deficit.

      15th December 2015

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