In India, the professional tax is imposed at the state level. However, not all the states impose this tax, the following states impose this levy in India - Karnataka, West Bengal, Andhra Pradesh, Maharashtra, Tamilnadu, Gujarat, and Madhya Pradesh. Business owners, working individuals, merchants and people carrying out various occupations comes under the purview of this tax.

Professional tax is levied by particular Municipal Corporations and majority of the Indian states impose this duty. It is a source of revenue for the government. The maximum amount payable per year is Rs.2,400/- and in line with your salary, there are predetermined slabs. It is paid by every member of staff employed in private companies. It is subtracted by the employer each month and sent to the Municipal Corporation. It is compulsory just like income tax. You will be eligible for income tax deduction for this payment.

Criteria in various states of India

In Maharashtra, this duty is applicable both on individuals and companies as laid down by the guidelines of the Maharashtra Professional Tax Act of 1975.

Every individual living in Maharashtra, involved in any business, profession, occupation or employment is legally responsible to pay it and has to get a Certificate of Enrolment from the Professional Authority.

As soon as you receive this certificate, you can fulfill your personal tax liability for 5 years by making a one-time payment, which is equivalent to the sum of Professional Tax for 4 years beforehand, getting relief for payment of one year.

In Tamil Nadu, it is imposed by the Municipal Council on businessmen, professionals, and employed individuals.

Every company which conducts business and every individual, who is involved directly in any business, occupation, or employment in the town panchayat on the first day of the half-year for which return has been submitted, needs to pay biannual tax at the rates stipulated.

Professional Tax Schedule (New)

Slabs of Salary or Wages

Rate of Tax

Rs.  8500 or less (w.e.f.  01.04.14 )

Nil

Rs. 8501 or more but less than Rs. 10001

Rs. 90 p.m.

Rs. 10001 or more but less than Rs. 15001

Rs. 110 p.m.

Rs. 15001 or more but less than Rs. 25001

Rs. 130 p.m.

Rs. 25001 or more but less than Rs. 40001

Rs. 150 p.m.

Rs. 40001 and above

Rs. 200 p.m.

 

Professional Tax Schedule (Old)

Slabs of Salary or Wages

Rate of Tax

Rs.  7000 or less (w.e.f. 01.04.13)

Nil

Rs. 7001 or more but less than Rs. 8001

Rs. 50 p.m.

Rs. 8001 or more but less than Rs. 9001

Rs. 90 p.m.

Rs. 9001 or more but less than Rs. 15001

Rs. 110 p.m.

Rs. 15001 or more but less than Rs. 25001

Rs. 130 p.m.

Rs. 25001 or more but less than Rs. 40001

Rs. 150 p.m.

Rs. 40001 and above

Rs. 200 p.m.

Source:  No. 454-F.T. dated 12.04.2013 ,   No. 848-F.T. dated 28.05.2014