Professional Tax

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Professional Tax

Deductions in salary slips are universal, but only a few individuals know why a part of their salary is deducted and where this amount goes.

One of the most common deductions found in salary receipts is professional tax. This tax, generally small in amount, is deducted from every employee's salary.

Let us decode everything about the term "P tax in salary" and determine whether you fall into the professional taxpayer category.

Professional Tax Meaning

Ptax full form is professional tax. It is a direct tax levied by state governments in India on salaried and self-employed individuals. A person who gets a salary each month from his employer or earns income from his own business, profession or trade needs to pay professional tax.

As the state government imposes this tax, it is paid to the state authorities and does not have any direct relation with the income tax. In short, you will also have to pay income tax to the central government along with professional tax.

Who Is Required to Pay Professional Tax in India?

For people with salaried income, employers are responsible for professional tax deductions from employees and paying it to the government. The amount deducted for professional tax is reflected in the salary slip of every individual each month.

Self-employed professionals (like doctors, chartered accountants, freelancers, etc) are also liable to pay professional tax. For such individuals, the tax is paid to the state government directly.

Professional Tax Deduction Limit

Article 276 of the Indian Constitution states that the maximum amount that can be deducted for professional tax is ₹2,500 per annum.

While earlier, this limit was ₹250, the 60th Amendment Act of 1988 increased the limit by ₹2,250 and set it to ₹2,500 to help state governments raise adequate funds.

Who Is Responsible for Collecting Professional Tax?

The Commercial Tax Department of respective states collects professional tax. This means that each state and union territory has its own regulations for charging and collecting professional tax. Besides, professional tax calculation is also done by the state governments.

Professional Tax Slabs for Salaried Individuals in Different States

As the state government handles professional tax, the professional tax percentage differs from state to state. Let us have a quick look at the tax rates for each state and UT of India.

Conclusion

Understanding the concept of taxes is essential to ensure that you are complying with tax-related rules and regulations. Professional tax is also a main component of tax liabilities that you need to pay on time from your salary.

If you do not know much about professional tax and want to know the amount of professional tax you are liable to pay, you can get help from this post and ensure that you remain free from tax dues around the clock.

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Disclaimer / TnC

Your policy is subjected to terms and conditions & inclusions and exclusions mentioned in your policy wording. Please go through the documents carefully.

In which states Is Professional Tax not applicable?

In which states Is Professional Tax not applicable?

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Many states and Union Territories in India do not charge professional tax, including Jammu & Kashmir, Haryana, Delhi, Uttarakhand, Uttar Pradesh, Rajasthan, Arunachal Pradesh, Daman & Diu, Dadra & Nagar Haveli, Goa, Lakshadweep, Andaman & Nicobar Islands, Himachal Pradesh and Chandigarh.

Who Is exempt from Professional Tax?

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Various categories of individuals are exempt from paying professional tax. Some of them are Members of the Force, people with disabilities, parents and guardians of children with disabilities, individuals above 65, Badli (temporary) workers, etc.

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