Professional Tax
Professional tax (PT) is a state-level tax on income from employment, a trade, or a profession. It is deducted from an employee’s salary each month and paid to the state government. It is capped at ₹2,500 a year.
How it works
Section titled “How it works”- You deduct PT from the employee’s monthly salary and deposit it with the state.
- The slab rates and thresholds differ from state to state, but no state may collect more than ₹2,500 a year per person.
- An employee can deduct the PT paid from their taxable income under the Income Tax Act.
Applicability
Section titled “Applicability”Professional tax is not levied in these states and union territories:
| Andaman & Nicobar Islands | Arunachal Pradesh | Chandigarh | Dadra & Nagar Haveli |
| Daman & Diu | Delhi | Goa | Haryana |
| Himachal Pradesh | Ladakh | Lakshadweep | Rajasthan |
| Uttarakhand | Uttar Pradesh |
This is a general list. Some states that levy PT also exempt low earners entirely, so check the threshold for the state you operate in.
Worked example (illustrative)
Section titled “Worked example (illustrative)”Most states levy PT in slabs. As an example, one state’s monthly slab is:
| Monthly salary | Monthly PT |
|---|---|
| Up to ₹15,000 | Nil |
| ₹15,001–₹20,000 | ₹150 |
| ₹20,001–₹25,000 | ₹200 |
| Above ₹25,000 | ₹300 |
An employee earning ₹28,000 a month pays ₹300 a month, or ₹3,600 a year — but PT is capped, so the annual liability is ₹2,500 (₹2,400 where the state cap is 12 × ₹200-equivalent). The slabs above are illustrative; use the notification for the state that applies to you.
Exemptions
Section titled “Exemptions”Exemptions vary by state but commonly include:
- Parents or guardians of a person with a permanent or mental disability
- Persons with a permanent physical disability, including blindness
- Members of the armed forces
- Individuals above 65 years of age
- Low earners below the state threshold
Check the rules for your state, because exemptions are not uniform.