What Is Professional Tax

Professional Tax: Meaning, Rates & Compliance Guide

A monthly deduction under the heading "Professional Tax" will always be on
your payslips. It combines basic pay, HRA, and transportation costs.

Written by : Knowledge Centre Team

2025-12-15

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12 minutes read

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If you are employed and earn a regular salary, you are required to pay professional tax. You must have seen the term professional tax, or PT, in the salary slips that you receive every month. 

Professional tax is deducted from your gross salary along with TDS, EPF and other deductions.

However, this tax doesn’t mean that it is levied only if you are in professional practice such as a doctor, lawyer etc. If you earn a salary, you are eligible to pay this tax.

Let us discuss what professional tax is in salary, its meaning, applicability, and more.

Key Takeaways
 

  • Professional tax refers to a tax levied by state governments on income from employment or profession
  • The maximum professional tax payable in a financial year is ₹2,500, regardless of the state
  • States define their tax slabs based on income, and hence, they vary 
  • Not all states charge professional tax and its applicability depends on which state a person lives or works in
  • The amount paid as PT has a deduction under Section 16 of the Income Tax Act, reducing your taxable salary income

What is the Meaning of Professional Tax in India?

Professional tax is a direct tax that is deducted from your gross salary by your employer.

This tax is levied by the state government and thus can vary depending on the state you live in. The maximum amount that you can be charged is ₹2500.

The tax is calculated based on the slabs. Each state can have different salary slab rates for the calculation of professional tax. Andhra Pradesh, Maharashtra, and Gujarat are some of the states where this tax is applicable.

What is the Professional Income Tax Limit?

The professional tax limit varies by state in India, as professional tax is a state-imposed levy. However, under the Constitution of India, the maximum professional tax that can be charged is ₹2,500 per year, as per Article 276.

Each state has its own slab rates based on an individual's monthly salary or income from a profession or business. Generally, professional tax is deducted monthly from salaried employees by their employers and deposited with the state government. For self-employed individuals, payment is made directly through the state’s professional tax department.

Since tax rates and limits are state-specific, you should check your state's regulations after learning what professional tax is.

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How Does Professional Tax Work? 

While we continue to understand what professional tax is, let us also go through how professional tax works. Like every direct tax formula, Professional Tax in India has its own formula, and the slab rate is set by the individual state or union territory. According to Article 246 of the Constitution, only the Parliament of India has the power to frame laws for subjects on the Union List, which includes tax on income.

However, in the case of the State and Concurrent lists, the state can make it optional to levy professional tax. While it is optional, most of the Indian states and union territories levy professional tax since it is a source of their revenue. 

Here is the list of the parties that are required to pay professional tax:

  1. Companies and Business Firms
  2. Limited Liability Partnerships (LLP)
  3. Corporations
  4. Co-op Societies and Associations
  5. Hindu Undivided Family
  6. Clubs
  7. Lawyers and Legal Practitioners
  8. Contractors
  9. Architects
  10. Engineers
  11. Insurance agents
  12. Chartered Accountants (CA)
  13. Company Secretary (CS)
  14. Surveyors
  15. Tax consultants
  16. Management consultants
  17. Doctors and other medical representatives

What is the Maximum Limit for Professional Tax in India? 

Although the tax is levied depending upon the income of the individual, the maximum amount any State can levy as Professional Tax is restricted to ₹2,500. This limit is defined under the Constitution to ensure uniformity across States. Even though rates vary regionally, no State can charge more than this annual cap.

Statewise Professional Tax Slabs

Professional slab rate varies from state to state. Some of the states that currently impose a professional tax in India are West Bengal, Maharashtra, Gujarat, Andhra Pradesh, Kerala, Tamil Nadu, Karnataka, Bihar, Assam, Madhya Pradesh etc.

Professional Tax in West Bengal:

 

Salary Per MonthTax
Up to ₹10,0000
₹10,001 to ₹15,000₹110
₹15,001 to ₹25,000₹130
₹25,001 to ₹40,000₹150
More than ₹40,000₹200

 

Professional Tax in Maharashtra:

 

Salary Per MonthTax
Till ₹7,500 (men)NA
Till ₹25,000 (women)NA
₹7,501 to ₹10,000 (men)₹175
₹10,000+  (men)₹200 (₹300 for the month of February)
    ₹25,000+ (women)₹200 (₹300 for the month of February)

 

Professional Tax in Karnataka:

 

Salary Per MonthTax
Up to ₹24,999NA
25,000+₹200 and ₹300 for Feburary

 

Professional Tax in Andhra Pradesh:

 

Salary Per MonthTax
Up to ₹15,000NA
₹15,001 to ₹20,000₹150
₹20,000+₹200

 

Professional Tax in Tamil Nadu:

 

Average Half Yearly IncomeTax
Up to ₹21,000Nil
From ₹21,000 to ₹30,000₹180 (Yearly ₹360)
From ₹30,001 to ₹45,000₹425 (Yearly ₹850)
From ₹45,001 to ₹60,000₹930 (Yearly ₹1860)
From ₹60,001 to ₹75,000₹1025 (Yearly ₹2050)
Above ₹75,000₹1250 (Yearly ₹2500)

 

Professional Tax in Telangana:

 

Salary per MonthTax
Up to ₹15,000NA
₹15,000 to ₹20,000₹150
₹20000+₹200

 

Professional Tax in Kerala:

 

Half Yearly IncomeTax
Up to ₹11,999Not Applicable
₹12,000 to ₹17,999₹320 (Yearly ₹640)
₹18,000 to ₹29,999₹450 (Yearly ₹900)
₹30,000 to ₹44,999₹600 (Yearly ₹900)
₹45,000 to ₹99,999₹750 (Yearly ₹1,500)
₹1,00,000 to ₹1,24,999₹1000 (Yearly ₹2,000)
₹1,25,000 onwards₹1,250 (Yearly ₹2,500)

Who is Responsible for Collecting and Paying Professional Tax?

For employees, their employer is responsible for the applicability, deduction, and payment of professional tax to their respective state government as per the rate slab. They are also responsible for registering and obtaining professional tax registration certificates. Individuals involved in freelance occupations without employees also need to register for this tax, as per the slab provided by the state government.

Do keep in mind that professional tax is subject to exemptions provided by respective states to specific categories.

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Freelancers operating independently must register for professional tax in accordance with state regulations, which may include financial thresholds. 

 

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How to Pay Professional Tax?

Professional Tax is a direct tax that is not levied by the central government. It is a state-levied tax. Thus, the mode of payment may also vary from state to state.

However, in general, professional tax can be paid via both online and offline modes.

For the offline method route, all you need to do is visit your local tax office, fill out the relevant form, and make the payment. If you want to avoid this hassle and get started from the comfort of your home, you can make the payment online.

You need to visit the relevant state’s official website for payment of professional tax. For example, if you reside in West Bengal, you need to log in to their official website: https://professiontax.wb.gov.in/

Step-by-step Process to Make an Online Payment of Professional Tax
 

  • Visit the State Government Portal: To make the payment online, go to the official state government portal for professional tax. For example, if you reside in West Bengal, you need to log in to their official website: https://professiontax.wb.gov.in/
  • Register/Login to Your Account: If you're a first-time user, you will need to create an account using your credentials. If you already have an account, simply log in using your username and password.
  • Select the 'Professional Tax Payment' Option: Once logged in, head over to the "Pay Professional Tax" section or the corresponding option available on the portal.
  • Enter Relevant Details: You will be prompted to enter your professional tax registration number, period of payment, and any other necessary details. Ensure the information is accurate.
  • Select the Payment Mode: Choose your preferred payment method, such as net banking, debit/credit cards, or UPI.
  • Confirm the Payment: Review the payment details and confirm. Once the payment is processed, you will receive a receipt.
  • Save the Acknowledgment: After successful payment, download and save the receipt for future reference. You can also print it out for your records.

Must read: Term Insurance Tax Benefits

What Happens if You Don't Pay Professional Tax?

Now you know what a professional tax is and how it can be paid, you should also note that there are certain consequences if you fail to comply with professional tax regulations. 

It is, therefore, important to be vigilant about the due date of filing returns and making the tax payment to avoid unwanted repercussions. Further, you should also register your business to obtain the registration and enrolment certificates on time. 

Penalty and other consequences of not paying professional tax include:
 

  • Late Fees: If you miss the due date for paying the tax, states charge late fees as a percentage of the outstanding tax. This percentage varies from state to state.
  • Interest on Delayed Payment: In addition to the late fees, you will be required to pay interest on the overdue amount, which increases over time.
  • Legal Action: In some cases, continued non-payment can lead to actions such as salary deductions, freezing of bank accounts, or even court proceedings.
  • Cancellation of Registration: In extreme cases, your professional tax registration can be cancelled if payments are consistently missed.

Exemptions in Professional Tax

Though every individual who receives a regular income (salary) is required to pay the professional tax, some individuals are exempt from it. So, if you fall under the categories mentioned below, you do not need to pay Professional Tax:

  1. Member of Force (Governed by the Army, Air Force, and Navy Act)
  2. An individual suffering from mental or physical disability. Disability can be blindness, deafness, etc
  3. Parent of a child suffering from a disability
  4. Charitable hospitals are present in places that come under the taluk level
  5. Badli workers (temporary workers who are employed in a factory)
  6. An individual running an educational institute upto 12th standard or pre-university
  7. A foreign individual who has been employed by the relevant state
  8. Any individual above 65 years
  9. Women who are solely engaged as agents under the Government’s Mahila Pradhan Kshetriya Bachat Yojana

What is Professional Tax Deduction and Exemption?

Yes, there is a professional tax deduction available, which is paid under Section 16 of the Income Tax Act of 1961.


Consequences of Violation of Professional Tax Regulation 

Each state has its own penalty rates for failure to register for professional tax in time and for delay in filing the returns. There is also a penalty for missing the due date, which again depends on the state legislation.

For example, in Maharashtra, the penalty for late registration is ₹5/day. There is also an interest of 1.25%/month for late payment by one month, 1.5% for the next two months of delay, and 2% for delay over 3 months. There’s also a 10% penalty on the tax amount in the case of non-payment/delay of professional tax without cause.

Paying Professional Tax in Advance: What You Need to Know?

Paying professional tax in advance is a convenient option offered by some state governments in India that allows you to fulfil your tax obligations ahead of time. You can thus avoid last-minute rushes, penalties, or interest charges due to delayed payments. 

The process of paying advance tax is similar to regular tax payment, but requires selecting the "Advance Payment" option on the state's tax portal or at the designated tax office. Some states also offer incentives or discounts when you choose to pay in advance for a longer period. 

Once the payment is made, you should retain the receipt or acknowledgement as proof for future reference. Additionally, businesses that deduct professional tax from employees' salaries must ensure their advance payments are correctly recorded and accounted for in their tax filings. 

Filing Returns for Professional Tax Compliance

You must also file returns for professional tax as per your state’s due dates to avoid penalties and ensure the smooth running of your business or profession. The following points must be kept in mind:

  1. As a salaried employee, your employer will deduct professional tax from your salary and deposit it with the state government. Thus, it is the employer’s responsibility to file the returns. The employer must also attach the payment proof and the return.

  2. If you are a self-employed individual, it is your responsibility to file the professional tax return on time.

Final Words 

Professional tax is a state-imposed tax on professions, trades, callings, and employment in India, serving as a significant source of revenue for state governments. The tax structure and slab rates vary across states, reflecting the diverse economic conditions and governance policies within the country. 

Generally, the rates are progressive, with higher income brackets incurring higher tax liabilities. Employers are responsible for deducting professional tax from salaries and remitting it to the state government, while self-employed individuals must directly comply with their state's regulations.

Understanding the specific provisions and compliance requirements in one's state is crucial for both employers and employees to ensure compliance with legal obligations and avoid penalties. The professional tax, though relatively minor to other taxes, plays an essential role in state finances, thereby supporting regional development.

Glossary:

  1. Gratuity: It is a lump-sum benefit paid by employers to employees as a token of appreciation for long-term service
  2. State-levied Tax: State governments set tax rates, collect them, and retain the revenue
  3. Slab Rate: The income range that is subject to this tax is known as the Income Tax Slab
  4. Section 16: A provision in the Income Tax Act that allows salaried individuals to claim deductions on professional tax paid
  5. Employer's Responsibility: An employer is liable to deduct and deposit tax on behalf of the employee to the state government
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FAQs

Professional tax is a direct tax that, unlike Income Tax, is governed by states and not the central government. Since union territories come under the control of the Central Government, they are not subject to paying the professional tax. However, Puducherry is one union territory that levies professional tax

Thus, the rest of the eight union territories, Andaman and Nicobar Islands, Chandigarh, Dadra, and Nagar Haveli and Daman and Diu, Delhi, Jammu and Kashmir, Lakshadweep, and Ladakh, are exempt from professional tax.

Since, most of these are very small in area and contribute less to the economy, they are exempt from this tax.

Yes, professional tax is compulsory. You are required to pay if you are a salaried individual. That is you receive a regular salary for your work.

However, the amount that you will have to pay towards your professional tax will depend on the state you reside in. Each state has different slab rates regarding the tax rates. The amount can vary from as little as ₹35 up to ₹2500.

In the following cases, you are not required to pay the tax:

  • If your income is below the slab rate of the relevant state
  • If you live in a state/UT where professional tax is not applicable
  • If you come under the exemptions list

Yes, professional tax is applicable to freelancers as well. Thus, even if you are a freelancer and generate your income that is more than the minimum prescribed limit of the state you are in, then you will have to pay the professional tax.

You can fill out the professional tax application form by simply visiting the official website of professional tax.

Here are the next steps you can follow:

  • Click on the ‘Enrolment Application’ section.
  • There’ll be two options: ‘new’ and ‘enrolled’. If you are using the site for the first time, click on the ‘new’ button.
  • Enter the details asked
  • Make the payment 

Once the payment is complete, you will receive a receipt that you must download and keep for future reference.

Since professional tax is governed by individual state laws rather than central legislation, each state and union territory has the constitutional power to determine if it should be levied and to set its own slabs, exemptions and rules.

Professional tax is a type of direct tax that your employer withholds from your gross pay. Because it is imposed by the state government, the tax you pay will differ according to the state you reside in. There is a maximum amount of ₹2500 that you might be charged. The slabs are used to compute the tax.

Every month, your professional tax is calculated based on your gross salary, minus deductions like retirement contributions, gratuities, and loans. Here are the steps you can follow to calculate your professional tax on salary:

  • Step 1: Check to see if the state of residency accepts the professional tax
  • Step 2: If yes, calculate the tax amount based on your monthly income.
  • Step 3: Verify the tax slab rates based on your income

Under the law governing professional tax (via Article 276 of the Constitution of India, as amended), the maximum amount any state can levy on an individual per year is ₹ 2,500.

Arunachal Pradesh, Goa, Haryana, Himachal Pradesh, Punjab, Rajasthan, Uttar Pradesh, and Uttarakhand are the Indian states where professional tax is not imposed.

Yes, for salaried individuals, professional tax paid during the year is typically allowed as a deduction from gross salary when calculating taxable income under the old tax regime. However, it is applicable only when the gross total income is below the exemption limit. 

Under the old tax regime, it will be a part of the ₹2.5 lakh standard exemption, and ₹3 lakh for the new regime.

If you work in a state that levies PT and your employer fails to deduct it (when legally required based on the income slab), the employer remains liable under state law to remit the tax. You as the employee, may also bear responsibility for the unpaid tax or face a penalty for non-compliance, depending on the state’s statutory provisions.

Yes, many states allow PT payment online through their official State Tax Department portals or authorised e-payment gateways.

If PT is applicable in your state and your income exceeds the minimum slab, your employer will deduct a small monthly amount from your salary (up to the annual cap of ₹2,500). This deduction marginally reduces your take-home pay each month, but given the overall cap, the annual financial impact is limited.

In salary terminology, PT stands for Professional Tax. It is a tax levied by certain Indian states on income earned by individuals through employment, business, or profession.

In a salary slip, PT refers to Professional Tax, which is a statutory deduction. If your state levies a professional tax, your employer deducts the applicable monthly amount from your salary and deposits it with the state government.

Disclaimer - This article is issued in the general public interest and meant for general information purposes only. The views expressed in this blog are solely those of the writer and do not necessarily reflect the official policy or position of Canara HSBC Life Insurance Company Limited or any affiliated entity. We make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability with respect to the blog or the information, products, services, or related graphics contained in the blog for any purpose. Any reliance you place on such information is therefore strictly at your own risk. You should consult with a qualified professional regarding your specific circumstances before taking any action based on the content provided herein.

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