What is professional tax and who has to pay it?
Professional tax is a small state-level tax on salaried employees, professionals and businesses, levied by states like Maharashtra, Karnataka, West Bengal and Tamil Nadu (some states don't levy it). Employers deduct it from salaries and deposit it; the maximum is capped at ₹2,500 per year. It's deductible from salary income under Section 16(iii).
1Who pays it
Salaried employees (deducted by the employer), self-employed professionals and businesses, in states that levy it. Rates are slab-based on monthly income, capped at ₹2,500 a year by the Constitution.
2Registration and deduction
Employers need a Professional Tax Registration Certificate (PTRC) to deduct and deposit, and an Enrolment Certificate (PTEC) for their own liability. The tax paid is deductible from your taxable salary under Section 16(iii).
Frequently asked questions
Is professional tax the same in every state?
No — it's a state tax, so rates and applicability vary, and some states (like Delhi, Haryana, UP) don't levy it at all. The annual maximum anywhere is ₹2,500.
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General information for AY 2026-27, not professional advice. Laws change with each Finance Act, notification or amendment and depend on your specific facts — verify the current position with a licensed CA or advocate before acting.