It is mandatory for every employer or organisation, unless it is a government entity, to deduct professional tax from its employees’ salaries. These taxes are paid to the state government and hence are counted as a source of revenue. To better understand this deduction in your salary, it is essential to understand professional tax and its calculation.
Professional tax slabs in different states
As the state imposes professional taxes, the tax slabs are different for different states. The tax slab sets the bar of what income will incur professional tax deductions on salary. The slab for any given income bracket may not be the same in two different states. Some states do not levy professional tax, leading to no deductions of professional tax in such states on your salary, no matter your income.
How these income slabs affect professional tax
Apart from the state you work in, your professional tax rate depends on the income bracket you fall under. It is also possible to face different professional tax slabs based on your source of income. It is essential to remember that February has a different tax amount than other months in many states like Maharashtra.
How to calculate professional tax
To calculate professional tax deduction, you will first need to consider your state. As some state governments do not levy professional taxes, calculating the tax in such states isn’t required. After considering the tax slab for your state, you can look for the income bracket you fall under. The income bracket will then give you a professional tax payable on a monthly or annual basis.
Calculating your professional tax amount is not very difficult as it depends mostly on two factors, state and income. However, you can also choose to simplify professional tax calculation on salary by using an online calculator.
For example, if you are a working professional in Gujarat earning Rs. 20,000 a month, your monthly professional tax will amount to Rs. 200, and your annual professional tax will be Rs. 2,400. In contrast, if you work in Maharashtra earning the same amount, your professional tax will be Rs. 200 for 11 months and Rs. 300 in February, with a total annual tax amounting to Rs. 2,500.
There are also some exemptions under professional taxes. For instance, professional taxes aren’t deducted from the salary of individuals over 65 years of age. It also isn’t deducted from the salary of those individuals who are disabled or are a parent/ guardian to a disabled child.
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