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What does Professional tax mean?

Summary: Your monthly pay slip has a component called professional tax. It varies according to your state and income. Check tax rates states wise.

06 Apr 2022 by Team FinFIRST

what is professional tax

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Your monthly pay slip has a component called professional tax. It varies according to your state and income.

Paying tax is the duty of every citizen. It helps the government administer fairly and provide benefits to those who need it the most. You pay taxes on almost everything, including food, clothes, and fuel. Your income is also taxable, although it differs from the professional tax deducted from your income every month.

Income tax is well-known, but not many are aware of the professional tax beyond the term itself. Read below for a better understanding of professional tax and its variations as applicable for people under different income categories.

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What is professional tax?

Professional tax is levied by the state government and applies to employees of every sector, traders, and even freelancers. Since the state government has the liberty to choose whether to charge professional tax from their employees, not all states in India have the same.

Professional tax is also subject to the income of the person.

According to the rules of different states, only people who have income above a specific limit must pay professional tax. Hence, it is a form of income tax and is levied at the source whenever possible.

What is the professional tax rate?

Since it is the state government that levies professional tax, it can vary from one stat to the other. For instance, in Karnataka, people earning up to ₹15,000 per month are exempt from professional tax. For people with income above that, a tax of ₹200 is payable per month.

For Andhra Pradesh, people with an income of ₹15,000 per month and below do not have to pay professional tax. Incomes between ₹15,000 and ₹20,000 per month are taxable at ₹150 per month. For incomes above that, the tax is ₹200 per month. Let us now look at the tax rates of some other states.

State	Income per month	Professional tax per month
Gujarat	Up to ₹5999	Nil
	₹6000 to ₹8999	₹80
	₹9000 to ₹11999	₹150
Maharashta	₹12000 and above	₹200
	Up to ₹7,500	Nil (for male)
	Up to ₹10,000	Nil (for female)
	From ₹7,500 to ₹10,000	₹175 (for male)
	₹10,000 onwards	₹200 for 11 months + ₹300 for 12th month
Telangana	Up to ₹15,000	Nil
	₹15,001 to ₹20,000	₹150
	₹20,001 onwards	₹200
	Up to 5 years (For professionals such as legal practitioners, CA, architects, etc.)	Nil
	Over 5 years (For professionals such as legal practitioners, CA, architects, etc.)	₹2,500 (pe
Kerala	Up to ₹11,999	Nil
	₹12,000 to ₹17,999	₹120
	₹18,000 to ₹29,999	₹180
	₹30,000 to ₹44,999	₹300
	₹45,000 to ₹59,999	₹450
	₹60,000 to ₹74,999	₹600
	₹75,000 to ₹99,999	₹750
	₹1,00,000 to ₹1,24,999	₹1000
	₹1,25,000 onwards	₹1250
West Bengal	Up to ₹10,000	Nil
	₹10,001 to ₹15,000	₹110
	₹15,001 to ₹25,000	₹130
	₹25,001 to ₹40,000	₹150
	₹40,001 and above	₹200

The states that do not levy professional taxes include:

Arunachal Pradesh
Himachal Pradesh
Delhi
Haryana
Uttar Pradesh
Uttarakhand
Andaman and Nicobar Islands
Daman & Diu
Dadra and Nagar Haveli
Lakshadweep
Jammu & Kashmir
Punjab
Rajasthan
Chandigarh
Goa

Who should pay professional tax?

All professionals from all backgrounds must pay professional tax. Freelancers must do the same, although the amount varies depending on a state’s tax laws. Traders, businessmen, and businesswomen making regular income must also pay professional taxes as per their tax slabs.

Taxes are fundamental to a country’s economic strength and growth. Timely payment of taxes can help the government better plan subsidies and benefits for the underprivileged and fuel growth for future progress.

Disclaimer

The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject Metra Trust or its affiliates to any licensing or registration requirements. Metra Trust shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.

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