“Professional Tax”

What is Professional Tax (PT)?

Professional Tax is a state tax levied on the income earned by individuals in the unorganized sector, by salaried individuals, and the self-employed. It is deducted at the source by the employer to the state government. It is applicable in most states of India and the rate differs from state to state.

Purpose of Professional Tax (PT)

It is collected by the state government to raise funds for the welfare of the state. The funds earned through Tax are primarily used to improve the infrastructure of the state and to develop community resources such as healthcare, education, and roads.

Who is Exempted from Professional Tax?

In most states, certain categories of employees are exempt from paying this Tax. These include public sector workers, agricultural laborers, students, disabled individuals, retired citizens, and other specific categories of people.

FAQs

Can the Professional Tax rates change over time?

Yes. Tax rates may change every year depending on the state government’s policy objectives. The state governments regularly review the current  Tax rates and make changes accordingly.

Who is responsible to deduct the profession tax?

According to the Professional Tax Act, it is the employer’s responsibility to deduct the profession tax from the salary of the employees. Employers are required to submit their employees’ Professional Tax to the concerned state government before the due date.

Also See: Payroll Reconciliation