Professional Tax and Other Local Taxes
Professional Tax (PT) is a state-level tax levied on individuals earning income through salary, profession, or business. Unlike Income Tax, PT is collected by the respective state governments, and rates vary across states. Employers are responsible for deducting PT from employee salaries and remitting it to the state authorities.
“Professional Tax ensures contributions to state welfare while employers maintain compliance.”
Overview of State-Specific Taxes
Applicability:
- PT applies to salaried employees, professionals (CA, doctors, lawyers, consultants), and self-employed individuals.
- Employers must register under the respective State Professional Tax Act.
- Every state prescribes its own slabs, rates, and exemptions.
Exemptions (commonly):
- Senior citizens (age 65+)
- Parents of children with disabilities
- Armed forces personnel
- Physically challenged employees (in some states)
Professional Tax Calculation
The PT amount depends on the monthly salary slab prescribed by the state. Employers deduct PT before salary disbursement and remit it to the state treasury.
General Formula:
Professional Tax = Applicable Rate (based on salary slab) × No. of Months
Examples of Professional Tax in Different States (2025):
Maharashtra (Monthly Slabs)
- Up to ₹7,500 → Nil
- ₹7,501 – ₹10,000 → ₹175
- Above ₹10,000 → ₹200 (₹300 in February)
Example: Salary = ₹15,000 → PT = ₹200 × 11 + ₹300 = ₹2,500/year
Karnataka (Monthly Slabs)
- Up to ₹15,000 → Nil
- Above ₹15,000 → ₹200 flat
Example: Salary = ₹25,000
- PT = ₹200 × 12 = ₹2,400 per year
West Bengal (Monthly Slabs)
- Up to ₹10,000 → Nil
- ₹10,001 – ₹15,000 → ₹110
- ₹15,001 – ₹25,000 → ₹130
- ₹25,001 – ₹40,000 → ₹150
- Above ₹40,000 → ₹200
Example: Salary = ₹30,000
- PT = ₹150 × 12 = ₹1,800 per year
Telangana & Andhra Pradesh (Monthly Slabs)
- Up to ₹15,000 → Nil
- ₹15,001 – ₹20,000 → ₹150
- Above ₹20,000 → ₹200
Example: Salary = ₹18,000
- PT = ₹150 × 12 = ₹1,800 per year
Other Local Taxes
Apart from Professional Tax, some states and municipal bodies impose additional taxes such as:
- Labor Welfare Fund (LWF): Contributions made by employer and employee for employee welfare (applicable in Maharashtra, Karnataka, Gujarat, etc.).
- Municipal Taxes / Cess: Certain city corporations levy local employment taxes.
- State Insurance Schemes: Some states run welfare or insurance schemes funded by employee contributions.
Employer’s Responsibility in PT Compliance
- Register for PT: Obtain Professional Tax Registration Certificate (PTRC) from the state authority.
- Deduct PT: As per state slabs before salary disbursement.
- Deposit Tax: Pay collected PT to the state government within due dates (monthly/quarterly).
- File Returns: Submit PT returns periodically as mandated.
- Maintain Records: Keep records of deductions, challans, and employee details.
Key Takeaway
Employers must deduct Professional Tax as per state-specific slabs, deposit it on time, and maintain proper records. Compliance ensures legal adherence, avoids penalties, and contributes to state welfare initiatives.