Question 1

What is professional tax and who has to pay it?

Accepted Answer

Professional tax is a state-level tax levied on individuals earning income through employment, profession, or trade. It is deducted monthly from the salary by the employer and remitted to the state government. The tax applies to salaried employees, self-employed professionals (doctors, lawyers, CAs), and business owners in states that levy it. Not all states impose professional tax — Kerala, for instance, does not.

Question 2

What is the maximum professional tax amount per year?

Accepted Answer

The maximum professional tax is ₹2,500 per year, as mandated by Article 276 of the Indian Constitution. No state can levy professional tax exceeding this cap. The actual amount depends on the salary slab defined by your state — lower salary brackets may pay less or nothing at all.

Question 3

Is professional tax deductible from income tax?

Accepted Answer

Yes. Professional tax paid during the financial year is fully deductible from your gross salary under Section 16(iii) of the Income Tax Act. This deduction is available under both the old and new tax regimes. It reduces your taxable income by the PT amount paid, resulting in a small but guaranteed tax saving.

Question 4

What are the professional tax slabs for Maharashtra?

Accepted Answer

In Maharashtra, professional tax is nil for monthly salary up to ₹7,500; ₹175/month for salary between ₹7,500 and ₹10,000; and ₹200/month for salary above ₹10,000. In February, those paying ₹200/month pay ₹300 instead, bringing the annual total to exactly ₹2,500 (₹200 x 11 + ₹300 = ₹2,500).

Question 5

Does Kerala levy professional tax?

Accepted Answer

No, Kerala does not currently levy professional tax. If you work in Kerala, no PT is deducted from your salary. However, this is a state decision and can change with future legislation. As of FY 2024-25, Kerala remains one of the states where professional tax is not applicable.

Question 6

How is professional tax different from income tax?

Accepted Answer

Professional tax is a state tax with a fixed amount based on salary slabs (max ₹2,500/year), while income tax is a central tax with progressive rates based on total annual income (can exceed several lakhs). PT is deducted monthly by the employer, while income tax involves TDS, advance tax, and annual filing. The PT paid is deductible when computing income tax liability.

Question 7

What happens if my employer does not deduct professional tax?

Accepted Answer

Employers are legally required to deduct and remit professional tax in states where it is applicable. If your employer fails to deduct PT, they may face penalties from the state government. As an employee, you should check your pay slip for the PT deduction. If it is missing and you are in a PT-applicable state, inform your HR department to avoid compliance issues.

Professional Tax Calculator — State-Wise Rates India