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What is Professional Tax and How to Calculate

Introduction

Even today, getting out of the complex web of taxes remains a challenge. Professional tax is levied by the Indian state. The state government collects this tax from the residents of their state on the basis of their employment. There are some states and union territories which do not collect professional tax from their residents. A professional tax calculator proves to be very helpful in simplifying this complex web of taxes. Professional Tax Calculator is a tool that helps you calculate professional tax seamlessly. In which article we told you completely what is professional tax and how you can use the professional tax calculator.

Professional Tax

Professional Tax is a tax imposed by the Indian state, which every state government of India basically imposes on its resident on the basis of his employment. This is a deduction made from gross income before making calculations. Professional tax is not a part of direct tax on your income, hence it can also be called charitable and benefit tax. The state government collects Professional Tax on the basis of certain criteria.

Those who are Liable to Pay Professional Tax:

As we know, professional tax is basically deducted from the monthly salary of any employee. After this it is withdrawn in installments and then deposited with the state authorities. The categories of people liable to pay professional tax are as follows:

  • A person employed on a monthly salary. It can be a government or private institution.
  • People associated with big business or professions like doctors, lawyers, CA etc.
  • If we talk about other categories of employees, then in this case the individual himself is liable to pay tax.

The owner of any business is basically responsible for deducting the amount of tax from the basic salary of his employees and depositing it in the concerned state authority.

Every private limited companies and sole proprietor must compulsorily apply for business tax registration upon incorporation.

Calculate Your Professional Tax Now!

Click the button below to access our Professional Tax calculator:

Calculate Professional Tax

Steps to Use Professional Tax Calculator

Step.1) First choose your state

Start by selecting your state from the drop down list. The calculator provides specific business tax slabs for each state which basically serves to ensure accurate calculations tailored to your location.

Step.2) Enter your salary

After selecting your state, enter your monthly salary. If you want to calculate for Madhya Pradesh, then enter your annual salary and for Tamil Nadu, enter the half-yearly salary.

Step.3) Calculate Professional Tax

After selecting the state and entering your salary, click on the "Calculate Tax" button. The calculator will then process the information provided by you and show the professional tax applicable to you.

Who is Exempted from Paying Professional Tax:

Certain categories are exempted from paying Professional Tax. This list varies from state to state:

  • Parents of children who have disabilities.
  • Members serving the state and the nation, such as the Air Force, Navy and Army.
  • Persons above 65 years of age.
  • Physically handicapped person.

Some states and union territories where professional taxes are not applicable:

Business tax is collected in many states of India, but there are some states and union territories which levy business tax on their residents, such as:

  • Haryana
  • Himachal Pradesh
  • Jammu & Kashmir
  • Rajasthan
  • Nagaland
  • Uttar Pradesh
  • Uttaranchal
  • Andaman & Nicobar
  • Daman & Diu
  • Dadra & Nagar Haveli
  • Delhi
  • Puducherry
  • Chandigarh
  • Lakshadweep

Conclusion

It is very important to understand the professional tax rules in India for accurate tax planning. Having a thorough understanding of what professional tax is and how it is governed by rules and regulations, individuals and businesses can ensure compliance and even negotiate penalties. In this entire article, we have told you in a very systematic manner what is professional tax, which are the states where this professional tax is not applicable and who has to pay professional taxes compulsorily. We have also explored in this article how you can calculate professional tax using a professional tax calculator.

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