Professional tax is levied by the state government on profession, trade and employment. The following states impose this tax: Andhra Pradesh, Assam, Chhattisgarh, Gujarat, Karnataka, Kerala, Madhya Pradesh, Maharashtra, Meghalaya, Orissa, Tamil Nadu, Tripura and West Bengal,. Professional tax registration certificate (PTRC) is mandatory within 30 days of employing staff in a business or, Professional tax enrollment certificate (PTEC) in the case of professionals/ business, 30 days from the start of the practice/ business.
Professional tax rates varies from state to state. For e.g, in Karnataka if an employee’s wages is more than Rs.15000 per month then Rs.200 has to deducted towards professional tax and if the wages are below Rs.15000 there is no deduction. It is the responsibility of the employer to deduct professional tax from the employee’s salary and pay to the department within 20th of every month.
The tax amount of professional tax paid during the year is allowed as Deduction under the Income Tax Act.