What is Professional Tax and how it is calculated?

by Ananya Nair Accounting and Legal Services

Professional tax is a state tax; it can be defined as a tax that is levied by a state government on all individuals who earn a living through any medium in that state. Professional tax is not impose all Indian states. Professional tax falls under indirect taxation. It is payable by salaried individuals or persons carrying out a particular trade or profession such as a lawyer, doctor, chartered accountant, etc., are liable to pay. Also, the tax applicable to different income slabs may vary from one state to state, but it has a maximum limit of Rs 2,500 per year. Salaried employee, deduct PT from their salary every month and deposit it to the government. However in the other hand self-employed required paying the PT themselves to the state government.

Professional Tax Slab Rates

In India, there are few states and union territories that do not charge any professional tax. Professional tax is higher in the month of February in the comparison of other months.

How to pay Professional Tax?

To calculate professional tax, first you will need to know that professional tax is applicable in your state or not. After that, you need to find tax slab of your state and determine your tax amount.

For the illustration purpose, you can find Andhra Pradesh Professional Tax rates-

· Gross income up to INR 15,000 there will be no tax

· For INR 15,001 to INR 20,000, it is INR 150 per month

· For INR 20,001 and above, it is INR 200 per month.

Commercial Tax Department of a state is responsible to collect Professional tax. The tax collected is transferred to the funds of the municipal corporation.