Professional tax is charged by the State Government on income earned from any sources. As per the Article 276, Clause (2) of the Indian Constitution, professional tax is charged on individuals. The rates of professional tax differs from states to states. However, the maximum amount levied by a state as professional tax is Rs. 2500. Professional tax is subject to a minimum limit of earning. For state government, professional tax is a source of revenue. The amount collected from professional tax is used for executing various social welfare schemes. Besides, the amount paid as professional tax comes under income tax deduction under Section 16 of the Indian Income Tax Act, 1961.
Almost all the states in India including Gujarat, Karnataka, Kerala, Madhya Pradesh, Maharashtra, Manipur, Meghalaya, Mizoram, Orissa, Assam, Tamil Nadu and Tripura to name a few levy professional tax, apart from Delhi. Although the Municipal Corporation of Delhi tried to impose professional tax on individuals earning income in Delhi from various sources, the proposal was rejected by the Standing committee of Municipal Corporation of Delhi. So, the working professionals in Delhi don’t have pay any professional tax. No professional tax slab rates are applicable for Delhi.
Who are the Professional Taxpayers?
Professional tax are applicable for both salaried and self-employed professionals who earn income by way of trade, business or any other means. Professional tax is charged as per applicable slab rate based on income of an individual.
Professional tax is deducted by the employers. They deduct it every month from the salary of the salaried employees. In case of self-employed individuals who don’t work have an employer, they have to pay this tax directly to the state government. They can do so by registering themselves. Upon registration, a registration number will be generated and issued to a concerned individuals. Against these registration number, an individual can pay professional tax at banks. Professional tax is imposed on entrepreneurs, working individuals, doctor, CA, lawyers, traders and people engaged in various occupations.
