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Professional Tax
What is Professional Tax (PT)?
Professional Tax is a state-level tax levied on income earned by professionals, employees, and trades. The employer deducts PT from the employee's salary and remits it to the state government.
Who is liable to pay Professional Tax?
Individuals earning an income, including:
- Salaried employees.
- Freelancers.
- Professionals like doctors, lawyers, and chartered accountants.
Employers must also pay PT for their business.
How much is the Professional Tax?
PT rates vary by state. For salaried employees, the maximum annual PT is capped at ₹2,500 as per the Constitution of India. Many states have a monthly slab-based deduction, e.g.:
- ₹200 per month for 11 months and ₹300 for the last month.
Is Professional Tax applicable in all states?
No, PT is levied only in states that have enacted laws for it, such as Maharashtra, Karnataka, West Bengal, Tamil Nadu, Andhra Pradesh, and Gujarat. States like Delhi and Haryana do not levy PT.
Who deducts and pays Professional Tax for employees?
Employers are responsible for deducting PT from employees' salaries and remitting it to the respective state's tax department.
Is Professional Tax deductible from income tax?
Yes, Professional Tax paid is deductible from the total income under Section 16 of the Income Tax Act.
How can I register for Professional Tax?
Businesses and self-employed professionals must register for PT through their state government’s tax portal. The process involves:
- 1. Submitting identity and business proof.
- 2. Obtaining a PT Registration Certificate (PTRC) and/or Professional Tax Enrollment Certificate (PTEC).
What happens if Professional Tax is not paid?
Non-payment of PT can result in:
- 1. Penalties and late fees.
- 2. Legal action by the state tax authorities.
Each state has its own penalty structure.
Are there any exemptions from Professional Tax?
Yes, exemptions vary by state but typically include:
- Senior citizens above 65 years.
- Handicapped individuals or those with a disability of 40% or more.
- Members of the armed forces.
How can employees verify PT deductions?
Employees can verify PT deductions on their payslip or by requesting a PT payment receipt from their employer. Additionally, they can check state-specific tax portals for records.
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