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Tax
Posted On : February 24, 2018

The States in which the Professional Tax is applicable and the States in Which it is not

Written By : Mayank Vats

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This article discusses about the states which regulate the professional tax. For this we need to know what is the meaning of the term professional tax. This article discusses in detail the various states which have the professional tax imposed on its citizens and the various states which do not have the professional tax applicable to them.

Professional Tax

What is a professional tax? Who all have to pay it and what is the criterion of payment? All this is discussed in this article and make sure you read it to gather whole lot of information at the same place. Professional Tax or the profession tax is the tax which is imposed by the State government in India. Anyone who is doing a profession has to pay a tax for the same for example if you are a chartered accountant, company secretary, lawyer, doctor etc. you are required to pay a tax for it. Different countries or states have different method of profession tax collection but in India we do it through the state government at a state level. However, not all states impose these taxes and some are exempted to it. This means that this is on the discretion of the state that the taxes can be imposed and it is not mandatory to be imposed. However it may be noted that the Central government does not mandate this tax to be imposed and the states which decide to impose this tax, can on their own discretion do it. The point of discussion that should arise here is that why not all the states be exempted from this tax when it is not mandatory? Why does it even exist? Like who would like to pay taxes for their profession? Who would like to give their own money to the government they earn through their talent or their passion?

Who can levy Professional Tax or the Profession Tax?

The question that arises is that who can levy the profession tax and is it even constitutional? If it is then how does not it violates the right to life and personal liberty? The profession tax is imposed on the people by the particular Municipal corporations and maximum of the Indian states impose this duty or tax. The state government imposes this tax because it is a source of income for the State and why will anyone leave a chance to earn money. The maximum amount that goes as a tax is Rs.2500 per year and it is according to the salary of the employee and the fixed slabs as well. Everyone pays this tax even the staff members of the employers and the employees as well.It is mandatory to pay professional tax. The taxpayer is eligible for income tax deduction for this payment.

What is the Constitutionality of the Profession Tax or how is it applicable in India?

The question that needs to be pondered upon is the constitutionality of the Profession tax. The reason behind this issue is that it is applicable in some states and in some it is not, therefore the discretion of the states is questionable as to its definition and where does this power arise from? There are so many things that one needs to consider about the people of the state and if some state is imposing the profession tax, is it thinking about the welfare of the people? If yes then what is that welfare associated with and does that amount to the non-welfare policy to the other states not applying this tax? Let us look into these questions below:- The applicability of the Profession Tax is as per the Indian Constitution under Article 276 which provides that there shall be levied and collected a tax on professions, trades, callings, and employments, in accordance with the provisions of this Act. Every person engaged in any profession, trade, calling, or employment and falling under one or the other classes mentioned in the second column of the Schedule shall be liable to pay the state government tax at the rate mentioned against the class of such persons in the third column of the said Schedule. Provided that Entry 23 in the schedule shall apply only to such classes of persons as may be specified by the State Government by notification from time to time.
  • Notwithstanding until the provisions to the contrary is made by the Parliament by law, and any law so made by the parliament may be made either generally or in relation to any specified States, municipalities, boards or authorities.
  • The power of the Legislature of a state to make laws with respect to the taxes on income accruing from or arising out of professions, trades, callings and employments.
  This means that Article 276 of the Indian Constitution approves the State government to make laws in relation to the subject of the Profession tax. It says that since the laws are made by the parliament we cannot question regarding the law making power of the State government regarding the profession tax.

Which States Approve Professional Tax?

There are certain states that approve the Profession Tax and certain states which do not. Mentioned below are the states that approve the profession tax.
  1. Andhra Pradesh
  2. Chhatisgarh
  3. Karnataka
  4. Maharashtra
  5. Tamil Nadu
  6. Assam
  7. Gujarat
  8. Kerala
  9. Meghalaya
  10. Tripura
  11. Bihar
  12. Jharkhand
  13. Madhya Pradesh
  14. West Bengal
  15. Manipur
  16. Mizoram
  17. Orissa
  18. Puducherry
  19. Punjab
  20. Himachal Pradesh
  21. Jammu and Kashmir
  22. Nagaland
  23. Sikkim
  24. Rajasthan
  25. Telangana

States which do not have Profession Tax

  1. Arunachal Pradesh
  2. Delhi
  3. Goa
  4. Haryana
  5. Uttar Pradesh
  6. Uttaranchal
  7. Andaman and Nicobar
  8. Chandigarh
  9. Daman and Diu
  10. Dadra and Nagar Haveli
  11. Lakshadweep

Slab of the Profession Tax In various states

Maharashtra

Profession Tax Slab for Salaried Employees in Maharashtra  
Salary or Wages
Upto Rs.5000/- Nil
Rs.5,001/- to Rs.10,000/- Rs.175/-
Rs.10,001/- and above Rs.200/-*
* Rs.300/- for the month of February
 
Salary Slabs Per Month Professional Tax Per Month

Andhra Pradesh
upto Rs.5,000/- Nil
Rs.5,001/- to Rs.6,000/- Rs.60/-
Rs.6,001/- to Rs.10,000/- Rs.80/-
Rs.10,001/- to Rs.15,000/- Rs.100/-
Rs.15,001/- to Rs.20,000/- Rs.150/-
Rs.20,001/- and above Rs.200/-

Assam
upto Rs.3,500/- Nil
Rs.3,501/- to Rs.5,000/- Rs.30/-
Rs.5,001/- to Rs.7,000/- Rs.75/-
Rs.7,001/- to Rs.9,000/- Rs.110/-
Rs.9,001/- and above Rs.208/-

Chattisgarh
upto Rs.12,500/- Nil
Rs.12,501/- to Rs.16,667/- Rs.150/-
Rs.16,668/- to Rs.20,833/- Rs.180/-
Rs.20,834/- to Rs.25,000/- Rs.190/-
Rs.25,001/- & above Rs.200/-

Gujarat
upto Rs.2,999 Nil
Rs.3,000/- to Rs.5,999/- Rs.20/-
Rs.6,000/- to Rs.8,999/- Rs.40/-
Rs.9,000/- to Rs.11,999/- Rs.60/-
Rs 12,000/- and above Rs.80/-

Karnataka
upto Rs.9,999/- Nil
Rs.10,000/- to Rs.14,999/- Rs.150/-
Rs.15,000/- and above Rs.200/-

Kerala
upto Rs.1,999/- Nil
Rs.2000/- to Rs.2999/- Rs.20/-
Rs.3000/- to Rs.4,999/- Rs.30/-
Rs.5,000/- to Rs.7,499/- Rs.50/-
Rs.7,500/- to Rs.9,999 Rs.75/-
Rs.10,000/- to Rs.12,499/- Rs. 100/-
Rs.12,500/- to Rs.16,666/- Rs.125/-
Rs.16,667/- to Rs.20,833/- Rs.166/-
Rs.20,834/- and above Rs.208/-

Madhya Pradesh
upto Rs.3,333/- NIL
Rs.3,334/- to Rs.4,166/- Rs.30/-
Rs.4,167/- to Rs.5,000/- Rs.60/-
Rs.5,001/- to Rs.6,666/- Rs.90/-
Rs.6,667/- to Rs.8,333/- Rs.150/-
Rs.8334/- and above Rs.175/-

Maharashtra
upto Rs.5000/- Nil
Rs.5,001/- to Rs.10,000/- Rs.175/-
Rs.10,001/- and above Rs.200/-*
* Rs.300/- for the month of February

Meghalaya
upto Rs.4,166/- Nil
Rs.4,167/- to Rs.6,250/- Rs.16.50/-
Rs.6,251/- to Rs.8,333/- Rs.25/-
Rs.8,334/- to Rs.12,500/- Rs.41.50/-
Rs 12,501./- to Rs.-16,666 Rs.62.50/-
Rs.16,667/- to Rs.20,833/- Rs.33/-
Rs.20,834/- to Rs.25,000/- Rs.35/-
Rs.25,001/- and above Rs.38/-

Odisha
upto Rs.5000/- Nil
Rs.5,001/- to Rs.6,000/- Rs.30/-
Rs.6,001/- to Rs.8,000/- Rs.50/-
Rs.8,001/-to Rs.10,000/- Rs.75/-
Rs.10,001/- to Rs.15,000/- Rs.100/-
Rs.15,001/- to Rs.20,000/- Rs.150/-
Rs.20,001/- & above Rs.200/-

Tamil Nadu
upto Rs.3,500/- Nil
Rs.3501/- to Rs.5000/- Rs.16.50/-
Rs.5001/- to Rs.7500/- Rs.39/-
Rs.7501/- to Rs.10000/- Rs.85/-
Rs.10001/- to Rs.12500/- Rs.126.50/-
Rs.12501/- & above Rs.182.50/-

Tripura
upto Rs.2500/- Nil
Rs.2501/- to Rs.3500/- Rs.55/-
Rs.3501/- to Rs.4500/- Rs.85/-
Rs.4501/- to Rs.6500/- Rs.100/-
Rs.6501/- to Rs.10000/- Rs.140/-
Rs.10001/- and above Rs.180/-

West Bengal
upto Rs.5,000/- Nil
Rs.5,001/- to Rs.6,000/- Rs.40/-
Rs.6,001/- to Rs.7,000/- Rs.45/-
Rs.7,001/- to Rs.8,000/- Rs.50/-
Rs.8,001/- to Rs.9,000/- Rs.90/-
Rs.9,001/- to Rs.15,000/- Rs.110/-
Rs.15,001/- to Rs.25,000/- Rs.130/-
Rs.25,001/- to Rs.40,000/- Rs.150/-
Rs.40,001/- and above Rs.200/-

What is the amount of Profession Tax Applicable?

The profession tax is not uniform in all the states and it has slab amount. This means that in every state approving this tax, there is a different slab amount.Now, this slab amount of the tax is based on the income which is gross in nature and the is of the professional and the salaried employees which means that the profession tax depends in the earnings of the financial year. It is deducted from the employer’s salary every month and in case it is a company, the directors of the company and the partners, the individual partners, the self-employed professionals or the owners of the business undertaken in this state, it is to be submitted depending upon their gross turnover in the preceding year. There are some cases in which the payment of the tax is fixed in nature and that is to be paid irrespective of the money you earn in a financial year. This means that in some cases it does not matter in which company what turnover is arising, it is fixed and the amount so fixed is the only amount that has to be paid as for instance in West Bengal, a person who owns a factory has to pay the tax for the profession he is practicing  only if the preceding year turnover is greater than Rs.5 lakh and in case of companies there is a mandatory payment of Rs. 2,500 each year as a professional tax irrespective of the turnover.

Who deducts the Professional Tax?

The question that arises is that when we know what the tax is, who subtracts the tax?   The person who owns a business is responsible for subtracting the professional tax from the salaries of his employees and then pay them the amount so collected to the appropriate government department. When such an amount collected is given to the concerned department of the government, he also has to file a return based on what is given within a specified amount of time. The return which is filed for should include the proof that you have paid the tax or the owner of the business has paid the tax. Circumstances in which the payment proof is not enclosed with the return application, the return shall be deemed to be incomplete and then the whole procedure will have to be followed again as it will be incomplete under the provision of the Section 16(iii) of the Income Tax Act. Therefore, the professional tax is deducted by the owner of the business under whom you work.

Registration

The question is that when the professional tax is deducted by the owner of the business, who registers the professional tax? What you need to do for the registration process, is apply for the registration certificate to your state tax department within thirty days of employing staff for your business or in other words simply by applying for the registration certificate is the go to your state tax department within a month of employing staff under you. If your work in more places than one, then you will have to apply separately to each authority and the place of work coming under their respective jurisdictions. Now that you know the taxes of different states, make sure you pay them and if not make sure that your state does not have the provision of the Profession Tax from the list mentioned above.  

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