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Why is Professional Tax different for different people ?

  • Highlights

  • Professional tax limit is Rs.2,500 per year

  • Not all states impose professional tax

  • Professional tax differs according to income slabs

  • It may also differ based on income source

Understanding professional tax is key to better tax management. It is different from income tax; however, it is an important part of your tax filing. This is because your taxable income is calculated after removing the professional tax deduction from your amount. Thus, it is essential to learn how professional tax is applicable. This includes knowing why professional tax in India is different for different people.

It is mandatory for every employer to deduct professional tax and pay the same to the state government. This source of revenue is used to improve the provisions for professionals in that state. The professional tax limit has been set at Rs.2,500 in a year. Take a closer look at how professional tax is calculated for different people.

Factors affecting professional tax

Based on State
Not all states levy professional taxes. Here are states that issue professional taxes:

- Karnataka
- Andhra Pradesh
- Meghalaya
- Tripura
- Orissa
- Maharashtra
- Tamil Nadu
- Chhattisgarh
- Madhya Pradesh
- West Bengal
- Assam
- Kerala
- Gujarat

Here are states that do not impose professional tax:

- Arunachal Pradesh
- Andaman and Nicobar Islands
- Chandigarh
- Chhattisgarh
- Dadra and Nagar Haveli
- Daman and Diu
- Delhi
- Goa
- Haryana
- Himachal Pradesh
- Jammu and Kashmir
- Punjab
- Rajasthan
- Uttar Pradesh
- Uttaranchal

Based on tax slab
The tax slabs for each of the states differ from one another. Few states do not impose professional taxes, which means you will not face any deduction. The minimum salary that is considered taxable for professional tax too differs as per states. Furthermore, tax slabs are divided based on income brackets and the professional tax payable for each of these brackets differ from one another. The month of February may also require a higher amount to be paid as compared to the amounts due on other months. In some situations, the source of income will also determine the amount due to be deducted as professional tax. There also exemptions of professional taxes based on jobs; for example, these taxes do not apply to employees of government jobs or members of defence forces, reservists or members of auxiliary forces.

Now that you are aware of the differences in professional taxes in the country, check your professional tax calculation using this information.

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