All you should know about Profession Tax

17th Aug 2015
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Profession Tax is a tax which is levied by the state on the income earned by way of profession, trade calling or employment. This tax is levied based on slab rates depending on the income of the individual. This slab rate is decided by the state government; hence, it varies from state to state. Any amount paid as Profession Tax to the state government is allowed as a deduction under Section 16 of the Income Tax Act.

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Every person liable to pay tax (either on his own or on behalf of employees) should apply for profession tax registration in the prescribed form with the prescribed authority. We recommend that Private limited Companies, One Person Companies, Partners of Limited Liability Partnerships, Partnership firms, and Sole Proprietors apply for profession tax registration immediately upon incorporation.

In the case of salary and wage earners, the profession tax is to be deducted by the employer from salary and wages, and the employer is liable to pay it to the state government. In case of other classes of individuals, the tax is liable to be paid by the person himself.

The profession tax slab rates in some of the major states in India are given below:

Profession Tax in Maharashtra:

Profession Tax in Maharashtra is governed by the Maharashtra State Tax on Professions, Trades, Callings and Employment Act, 1975. The Profession Tax slab rate on salary and wages are as follows:

Monthly Salary WagePT Payable
Salary and Wage earners - such persons whose monthly salaries or wages :-
a.     do not exceed rupees 7,500Nil
b.     i) In case of male: exceeds Rs. 7,500 but does not exceed rupees 10,000Rs. 175 p.m.
ii) In case of female: does not exceed Rs 10,000Nil
c.      exceeds rupees 10,000Rs. 2,500 per annum to be paid in the following manner:-(a) rupees two hundred permonth except for the month ofFebruary(b) rupees three hundred for themonth of February

Consequences for late payment or non payment:

For late payment of PT, interest @ 1.25% p.m. is levied and the state may also impose a penalty of 10% of the total amount due.

Profession Tax in Delhi

Profession Tax is not levied in Delhi.

Profession Tax in Karnataka

Profession tax in Karnataka is governed by the Karnataka State Tax on Professions, Trades, Callings and Employment Act, 1976. The Profession Tax slab rate on salary and wages are as follows:

Monthly Salary WagePT Payable
Salary and Wage earners - such persons whose monthly salaries or wages :-
a.     Less than Rs. 10,000Nil
b.     Rs. 10,000 to 14,999Rs. 150 p.m.
c.      Rs. 15,000 and aboveRs. 200 p.m.

Consequences for late payment or non payment:

For late payment of PT, interest @ 1.25% p.m. is levied and the state may also impose a penalty of 50% of the total amount due.

Profession Tax in West Bengal

Profession Tax in West Bengal is governed by the West Bengal State Tax on Professions, Trades, Callings and Employment Act, 1979. The profession tax slab rate on salary and wages are as follows:

Monthly Salary WagePT Payable
Salary and Wage earners - such persons whose monthly salaries or wages :-
a.     Less than Rs. 8,500Nil
b.     Rs. 8,501 to Rs. 10,000Rs. 90 p.m.
c.      Rs. 10,001 to Rs. 15,000Rs. 110 p.m.
d.     Rs. 15,001 to Rs. 25,000Rs. 130 p.m.
e.     Rs. 25,001 to Rs. 40,000Rs. 150 p.m.
f.       Rs. 40,000 and aboveRs. 200 p.m.

Consequences for late payment or non payment:

For late payment of PT, interest @ 1% p.m. is levied and the state may also impose a penalty of 50% of the total amount due.

Profession Tax in Andhra Pradesh

Profession Tax in Andhra Pradesh is governed by the Andhra Pradesh Tax on Professions, Trades, Callings and Employment Act, 1987. The profession tax slab rate on salary and wages are as follows:

Monthly Salary WagePT Payable
Salary and Wage earners - such persons whose monthly salaries or wages :-
d.     Less than Rs. 15,000Nil
e.     Rs. 15,001 to 20,000Rs. 150 p.m.
f.       Rs. 20,000 and aboveRs. 200 p.m.

Consequences for late payment or non payment:

For late payment of PT, interest @ 2% p.m. is levied and the state may also impose a penalty of not less than 25% but not exceeding 50% of the total amount due.

Note:

  1. Other classes of individuals are requested to refer to the rate schedule of the respective state for slab
  2. The payment of Profession Tax and periodicity of filing of return varies from state to state, by class of individuals, and in some states it is based on slab rates; hence, readers are requested to refer to the Profession Tax Act and rules of the respective state.
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