What is Professional Tax?
Professional Tax is the tax charged by the state governments in India.Any one earning an income from salary or any one practising a profession such as chartered accountant, lawyer, doctor etc are required to pay this professional tax.Different states have different rate and method of collection. In India, the professional tax is imposed at the state level. However, not all the states impose this tax, the following states impose this levy in India – Karnataka, West Bengal, Andhra Pradesh, Maharashtra, Tamilnadu, Gujarat, and Madhya Pradesh. Business owners, working individuals, merchants and people carrying out various occupations comes under the purview of this tax.(wikipedia)
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Unlike income tax and service tax, which is levied by central government ‘Professional Tax’ is charged by the state governments in India. Professional tax is levied from salaried employees or practicing professionals or persons engaged in any trade etc. Employers are liable to deduct professional tax from salary/wage and depositing the same to the concerned local body/authority and in other cases, persons themselves shall pay the professional tax.
All Persons liable to pay professional tax should obtain certificate of enrolment from professional tax authority.
Rate of professional tax is determined on the basis of income earned by the person. Each state charges different rates for levying professional tax. Several state governments have launched web-sites to facilitate the professional tax payers to submit their returns and make the payment electronically.
Amount paid as professional tax is allowed as deduction under section 16 while computing total income for the purpose of income tax.
Default in registration, filing returns, payment of professional tax etc… will attract penalty as prescribed by concerned acts.