Professional tax is a direct tax that state governments levy on employees and professionals. It’s a source of state revenue, used to fund regional welfare and development schemes.
Rates vary from state to state — dedicated state-wise pages below cover the specifics.
Like income tax, professional tax is linked to income slabs and deducted at source by the employer. It’s a nominal tax, rarely more than a few hundred rupees a month, and no state can charge more than ₹2,500 a year. The total amount paid during the year can be claimed as a deduction under the Income Tax Act.
For detailed slab rates, check the state-specific links below.
State-wise Professional Tax Acts
Every state has its own Professional Tax Act, amended from time to time. Click a state below for details.
States Where Professional Tax Does Not Apply
| Andaman and Nicobar Islands | Arunachal Pradesh | Chandigarh | Dadra and Nagar Haveli |
| Daman and Diu | Delhi | Goa | Haryana |
| Himachal Pradesh | Ladakh | Lakshadweep | Rajasthan |
| Uttaranchal | Uttar Pradesh |
Applicability
Professional tax applies to wage-earning employees across almost all industries, as well as to professionals such as doctors, chartered accountants, consultants, traders, and other self-employed individuals.
It also applies to entities beyond individuals — the definition of “person” extends to:
- Corporations
- Companies
- Branch offices of companies
- Co-operative societies
- Clubs and associations
- Hindu Undivided Families (HUF)
Who Is Exempt From Professional Tax?
- Parents of children with a permanent physical or mental disability
- Members of the armed forces under the Army Act 1950, Air Force Act 1950, or Navy Act 1957, including auxiliary forces and reservists
- Badli workers in the textile industry
- Individuals with a permanent physical disability, including blindness
- Women working exclusively as agents under the Mahila Pradhan Kshetriya Bachat Yojana or as Directors of Small Savings
- Parents or guardians of individuals with a mental disability
- Individuals above 65 years of age
Even non-exempt individuals often don’t owe professional tax if their income falls below the threshold set by their state.
This list is a general guide — check the specific state rules below for details that apply to you.
Who Deducts Professional Tax?
Employers are responsible for registering, deducting, and remitting professional tax for their employees. Failing to comply carries fines and penal tax.
Self-employed professionals handle this themselves — they must first enroll and get a Certificate of Enrollment from the tax department.
Consequences of Non-Compliance
- Failure to register: Penalty for the entire unregistered period
- Late or missed deposits: Penalty for the delay period
- Non-deposit of amount: Authorities can recover the amount, plus penalty and interest, from the defaulter’s assets — including attaching bank accounts. Severe cases can lead to prosecution.