Profession tax or employee tax
About Professional Tax
Professional tax or employees tax is tax which is collected by state government. It is applicable for any individual or professional who earn their income from any source. Professional tax is applicable to almost every individuals if you are trader, trade calling, CA, Doctors , Engineers etc.
The upper limit of professional tax has been set to Rs. 2500 per annum per individual. Professional tax need to pay in installment monthly wise according to your gross income or gross salary. Every states have their own slabs for tax calculation.
If you are employee under any company then company will deduct the professional tax from your salary and the same amount will be deposited to state government on your behalf.
If you are individual and not working under any company or anyone then you have to self register under Professional Tax and then you have deposit your own professional tax.
Professional tax is deducted under Section 16 (iii) of the Income Tax Act, 1961. According to this section, the professional tax that an employee pays is allowed as a deduction from their gross salary while filing their income tax returns.
The states which impose professional tax are Punjab, Uttar Pradesh, Karnataka, Bihar, West Bengal, Andhra Pradesh, Telangana, Maharashtra, Tamil Nadu, Gujarat, Assam, Kerala, Meghalaya, Odisha, Tripura, Madhya Pradesh, Jharkhand and Sikkim.
To whom Professional tax is applicable?
- An individual
- Any company, Corporate house, Partnership firm, Proprietorship,
- HUF (Hindu Undivided Family)
How to calculate Professional Tax?
Professional tax is always calculated on gross salary as per tax slabs. Here Gross salary means after deduction of your leave , absent or performance but before the deduction of loan or advance and also excluding employer contribution.
Some people calculate it on Net salary which is totally wrong. Because net pay is calculated after all the deduction (Loan, Advance) and withholding taxes.
Consequences of not filing professional tax
Delays in obtaining Registration Certificate, a penalty of Rs. 5/- per day. In case of non/late payment of profession tax, penalty will be 10% of the amount of tax. In case of late filing of returns, a penalty of Rs. 1000 per return will be imposed if you filed after due date in 1 month. After 1 month, a penalty of Rs. 2000 will be imposed.
This charges may vary from state to state.
Tax Slabs State Wise
Professional Tax for Assam
| Monthly Salary | Tax applicable monthly in Rs. |
| Less than Rs. 10,000 | NIL |
| Rs. 10,001 to Rs. 15,000 | 150 |
| Rs. 15,001 to Rs. 24,999 | 180 |
| More than Rs. 25,000 | 208 |