Professional Tax : Slab, Rates & Applicability in India

Profession Tax is a direct tax which is levied on persons earning an income by way of either practising a profession, employment, calling or trade. Unlike income tax which is levied by the Central Government, profession tax is levied by the government of a state or union territory in India. Majority but not all of the Indian states impose profession tax. While states like Karnataka and Maharashtra have profession tax, there is no such tax applicable in Delhi and Haryana.

Profession Tax Rates in Key States of India

As this tax is a state subject, the rate of profession tax varies from one state to another. While some states might charge it as a percentage value, other states tend to charge it as a fixed amount based on income slabs. The following are the professional tax rates in key states in India:

StateIncome per MonthTax Rate/Tax Amount (p.m.)
Andhra PradeshLess than Rs. 15,000Nil
Rs. 15,000 to less than Rs. 20,000Rs. 150
Rs. 20,000 and aboveRs. 200
GujaratUp to Rs. 5999Nil
Rs. 6000 to Rs. 8999Rs. 80
Rs. 9000 to Rs. 11999Rs. 150
Rs 12000 and aboveRs. 200
KarnatakaUp to Rs. 15,000Nil
Rs. 15,001 onwardsRs. 200
Kerala (Half yearly income slabs and half yearly tax payment)Up to Rs.11,999Nil
Rs.12,000 to Rs.17,999Rs.120
Rs.18,000 to Rs. 29,999Rs.180
Rs.30,000 to Rs. 44,999Rs.300
Rs.45,000 to Rs. 59,999Rs.450
Rs.60,000 to Rs. 74,999Rs.600
Rs.75,000 to Rs. 99,999Rs.750
Rs.1,00,000 to Rs. 1,24,999Rs.1000
Rs.1,25,000 onwardsRs.1250
MaharashtraUp to Rs. 7,500Nil (for male)
Up to Rs. 10,000Nil (for female)
From Rs. 7,500 to Rs. 10,000Rs. 175 (for male)
Rs. 10,000 onwardsRs. 200 for 11 months + Rs. 300 for 12th month
TelanganaUp to Rs. 15,000Nil
Rs.15,001 to Rs.20,000Rs. 150
Rs.20,001 onwardsRs.200
Up to 5 years (For professionals such as legal practitioners, CA, architects, etc.)Nil
Over 5 years (For professionals such as legal practitioners, CA, architects, etc.)Rs. 2,500 (per annum)
West BengalUp to 10,000Nil
10,001 to 15,000Rs. 110
15,001 to 25,000Rs. 130
25,001 to 40,000Rs. 150
40,001 and aboveRs. 200

Profession Tax Applicability

Profession tax is applicable on the following classes of persons:

  1. An Individual
  2. A Hindu Undivided Family (HUF)
  3. A Company/Firm/Co-operative Society/Association of persons or a body of individuals, whether incorporated or not

Who Pays Profession Tax?

Self-employed persons who carry out their profession or trade on their own and fall in the ambit of profession tax are liable to pay the tax themselves to the state government. The Commercial Taxes Department of a state/union territory is the nodal agency which collects profession tax on the basis of predetermined tax slabs which vary for each state and union territory. The tax is calculated on the annual taxable income of the individual, however, it can be paid either annually or monthly. Self-employed taxpayers need to obtain a Certificate of Enrolment from prescribed authority (of the concerned state) in the prescribed manner.

However, in case of salaried individuals and wage earners, the employer is liable to deduct profession tax from the employee’s salary on a monthly basis (as per the applicable professional tax slab) and deposit the same with the state government. The employer needs to get a Certificate of Registration from the concerned authority to be able to deposit the deducted profession tax.

Maximum Profession Tax Amount

A maximum of Rs. 2,500 can be levied as professional tax on any person per financial year.

Profession Tax Is Deductible Under Section 16 (iii) Of The Income Tax Act
According to Section 16 (iii) of the Income Tax Act 1961, the profession tax paid by an employee is allowed as a deduction from his/her gross salary income.

Profession Tax Applicability in India

Major Indian States and Union Territories Which Levy Profession Tax

Following are some of the Indian states and union territories where professional tax is applicable:

  1. Andhra Pradesh
  2. Karnataka
  3. Maharashtra
  4. Tamil Nadu
  5. Assam
  6. Kerala
  7. Meghalaya
  8. Tripura
  9. Bihar
  10. Jharkhand
  11. Madhya Pradesh
  12. West Bengal
  13. Manipur
  14. Mizoram
  15. Odisha
  16. Puducherry
  17. Sikkim
  18. Telangana
  19. Nagaland*
  20. Chhattisgarh
  21. Gujarat

*According to the Nagaland Department of Taxes, professional tax is applicable in the state, however, other widely-followed publications there is no professional tax applicable in Nagaland.

Major Indian States and Union Territories Which Do Not Levy Profession Tax

Following are some of the Indian states and union territories where no professional tax is applicable:

  1. Arunachal Pradesh
  2. Himachal Pradesh
  3. Delhi
  4. Haryana
  5. Uttar Pradesh
  6. Uttarakhand
  7. Andaman and Nicobar Islands
  8. Daman & Diu
  9. Dadra and Nagar Haveli
  10. Lakshadweep
  11. Jammu & Kashmir
  12. Punjab
  13. Rajasthan
  14. Chandigarh
  15. Goa