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Professional Tax is a state-level tax in India levied on income from employment, profession, or trade, with a maximum annual cap of INR 2,500 — though not all Indian states impose it.
Professional Tax is authorized under Article 276 of the Indian Constitution, which allows state governments to levy it on individuals earning from professions, trades, callings, or employment. The maximum annual professional tax is constitutionally capped at INR 2,500 per year. States that currently levy professional tax include Maharashtra, Karnataka, West Bengal, Andhra Pradesh, Telangana, Tamil Nadu, Gujarat, Madhya Pradesh, and Meghalaya, among others. States like Delhi, Rajasthan, Haryana, Uttar Pradesh, and Arunachal Pradesh do not levy professional tax. The slab rates and collection frequency (monthly or annual) vary by state. Employers are responsible for deducting professional tax from employee salaries and remitting it to the state government, usually monthly or annually. Professional tax paid by an employee is deductible from gross total income under Section 16(iii) of the Income Tax Act. Employers must register under the applicable state's Professional Tax Act and obtain an Enrollment Certificate (EC) and Registration Certificate (RC).
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