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Professional Tax by State Government and Rates

Professional Tax by State Government and Rates

Professional Tax is a Tax which is levied by the State on the Income earned by way of profession, trade, calling or employment. This form of tax was first levied in India in the year 1949 and the power to levy Professional Tax has been given to the States by way of Clause (2) of Article 276 of the Constitution of India.
This Tax is levied based on slab rates depending on the Income of the Individual. This Tax is just like Income Tax except for the fact that Income Tax is collected by the Central Govt and Professional Tax is collected by the State Government. When this tax was first introduced in India, the maximum limit on the tax to be collected was Rs. 250. However, this limit was raised from Rs. 250 to Rs. 2500 in the year 1988.
For the past few years, State Governments have been requesting the Parliament to raise this ceiling from Rs. 2500 to Rs. 7500. However, their request has not been accepted and the maximum amount of Professional Tax that can be levied by any State is Rs. 2,500 only.
Any amount paid as Professional Tax to the State Govt. is allowed as a deduction under Section 16 of the Income Tax Act  and Income Tax on the Balance Amount is levied as per the Income Tax Slab Rates in force.
In case of Salaried and Wage earners, the Professional Tax is liable to be deducted by the Employer from the Salary/Wages and the Employer is liable to deposit the same with the state government. In case of other class of Individuals, this tax is liable to be paid by the person himself.

Professional Tax in India is collected by some state governments themselves while in several other  states which have active Panchayats, the local bodies themselves levy and this tax.  Every person liable to pay this Tax (either on his own behalf or on behalf of its employee) shall apply for Professional Tax Registration in the prescribed form with the prescribed authority.

As the states have been empowered to levy and collect this Tax, different states levy Professional Tax as per Different Slab Rates. The Professional Tax Slab Rates in some of the major states in India are given below:-

Click here for Professional Tax Rates

Professional Tax by State Government and Rates

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