Professional Tax — state levy on employment

Professional tax is a STATE levy on salaries / professions / trades, deducted by the employer from salary and deposited with the state. The CONSTITUTIONAL maximum is ₹2,500 PER YEAR per person (Article 276). Rates and slabs vary by state, and several states (e.g. Delhi, Haryana, UP) do NOT levy it. It is deductible from salary under §16(iii) of the Income-tax Act.

Key points

• Professional tax (PT) is levied by STATE governments under Article 276 of the Constitution on income from employment, profession, trade or calling.
• The aggregate PT payable by a person to a state is CAPPED at ₹2,500 PER YEAR by Article 276(2).
• Each state has its own Act, slabs and due dates — e.g. Maharashtra, Karnataka, West Bengal, Tamil Nadu, Gujarat, Telangana levy it on a monthly salary slab basis;
• states such as DELHI, HARYANA, UTTAR PRADESH, UTTARAKHAND and others do NOT levy professional tax at all.
• The EMPLOYER is responsible for DEDUCTING PT from each employee's salary and depositing it with the state treasury (monthly or as the state prescribes), plus obtaining a Professional Tax Registration Certificate (PTRC for employees) and Enrolment Certificate (PTEC for the entity/professional).
• For income-tax, professional tax actually paid is allowed as a DEDUCTION from salary income under §16(iii).
• Because the levy, slabs and applicability are STATE-SPECIFIC, always check the rules of the state in which the employee works.

Reference: Article 276, Constitution + respective State PT Acts; §16(iii) ITA