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What is professional tax and how is it calculated

  • Highlights

  • Professional tax is issued by state government

  • Its rate is subject to your state’s regulation

  • Professional tax has exemptions

  • Professional tax calculation must be checked by a C.A.

As a working professional, you are sure to be well-versed with having to pay tax on your income. While you may have noticed that your employer deducts professional tax, do you know what it is? Professional tax is not the same as income tax, but it an important component of your tax obligation. So, understanding it will help you file your taxes more easily and understand the deductions too.

What is professional tax?

Professional tax is a tax that is levied by the state government and applies to income you earn through employment. You can often find the deduction for the same on your salary slip each month. Professional tax one source of revenue for the government and is used towards bettering the services for professionals in that state. Thus, it is essential for every employer to deduct professional tax on salary, although there are a few exemptions related to this. Professional tax in India varies from state to state. The maximum amount of professional tax cannot exceed Rs.2,500 annually.

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Which states impose professional tax and what are the tax slabs?

Take a look at the list of states that impose professional taxes and their tax slabs per month.

- Karnataka: Rs.200 on salary of 15,000 and above.
- Bihar: Rs.83.33 on salary between 25,001–41,666, Rs.166.67 on salary between 42,667–Rs.83,333, Rs.208.33 on salary of 83,334 and above.
- West Bengal: Rs.110 on salary between 10,001–15,000, Rs.130 on salary between 15,001–25,000, Rs.150 on salary between 25,001–40,000, Rs.200 on salary of 40,001 and above.
- Andhra Pradesh: Rs.150 on salary between 15,001–,20,000, Rs.200 on salary of Rs.20,001 and above.
- Telangana: Rs. 150 on salary between 15,001 to 20,000, Rs. 200 on salary of 20,000 and above.
- Maharashtra: Rs.175 on salary between 7,501–10,000, Rs.200 and Rs.300 on salary of 10,001 and above.
- Tamil Nadu: Rs.16.6 on salary between 3.501–5.000, Rs.40 on salary between 5,001–9,000, Rs.126.67 on salary between 9,001–12,500, Rs.182.50 on salary of 12,501 and above.
- Gujarat: Rs.80 on salary between 6,000–8,999, Rs 150 on salary between 9,000–11,999, Rs.200 on salary of 12,000 and above.
- Assam: Rs.150 on salary between 10,001–14,999, Rs.180 on salary between 15,000–24,999, Rs.208 on salary of 25,000 and above.
- Kerala: Rs.20 on salary between 2,000–2,999, Rs.30 on salary between 3,000–4,999, Rs.50 on salary between 5,000–7,499, Rs.75 on salary between 7,500–9,999, Rs.100 on salary between 10,000–12,499, Rs.125 on salary between 12,500–16,666, Rs.166 on salary between 16,667–20,833, Rs.208 on salary of 20,884 and above.
- Meghalaya: Rs.16.50 on salary between 4,167–6,250, Rs.25 on salary between 6,251–8,333, Rs,41.50 on salary between 8,334 and 12,500, Rs.62.50 on salary between 12,501–16,666, Rs.83.33 on salary between 16,667–20,833, Rs.104.16 on salary between 20,834–25,000, Rs.125 on salary between 25,001–29,166, Rs.150 on salary between 29,167–33,333. Rs.175 on salary between 33,334–37,500, Rs.200 on salary between 37,501–41,666, Rs.208 on salary of 41,667 and above.
- Odisha: Rs.125 on salary between 13,305–25,000, 200 and 300(in February) on salary of 25,001 and above.
- Tripura: Rs.70 on salary between 5,001–7,000, Rs.120 on salary between 7,001–9,000, Rs.140 on salary between 9,001–12,000, Rs.190 on salary between 12,001–15,000, Rs.208 on salary of 15,001 and above.
- Madhya Pradesh: Rs.175 on salary between 7,501–10,000 (not applicable for women), Rs.200 and Rs.300 on salary of 10,001 and above.
- Sikkim: Rs.125 on salary between 20,001–30,000, Rs.150 on salary between Rs.30,001–40,000, Rs.200 on salary of 40,001 and above.
- Manipur: Rs.100 on salary between 4,251–6,250. Rs.167 on salary between 6,251–8,333, Rs.200 on salary between 8,334–10,416, Rs.208 and Rs.212 on salary of 10,417 and above.

Who is exempted from professional tax?

- Parents/guardians of mentally or permanently disabled children
- Members of forces mentioned in Army Act, 1950, serving the state
- Disabled persons
- Senior citizens above 65 years of age
- Female agents of Mahila Pradhan Kshetriya Bachat Yojana or Director of Small Savings

How to calculate professional tax?

In order to calculate professional tax, you will need to first consider if professional tax is applicable in your state. You can then look at your state’s professional tax slab and determine your tax amount. This must be done keeping your salary amount in mind. Accordingly, you will be able to see how much professional tax is deductible per month or annually. You can also choose to use a professional tax calculator by clicking here.

Calculate your taxes and prepare in advance to avoid hasty mistakes or missing the due date. Remember that your calculation and payment will need to be certified by a registered chartered accountant.

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