Question 1

What is professional tax and who pays it?

Accepted Answer

Professional tax is a state-level tax on salaried employees and professionals, levied under Article 276 of the Constitution. The employer deducts it monthly from the salary and remits it to the state government. The maximum any state can charge is ₹2,500 a year.

Question 2

Why does Maharashtra deduct ₹300 in February?

Accepted Answer

Maharashtra spreads its annual ₹2,300 liability as ₹200 for eleven months and ₹300 in February. Payroll software that hard-codes ₹200 for every month under-deducts in February, which is one of the most common PT errors.

Question 3

Which states do not levy professional tax?

Accepted Answer

Delhi, Uttar Pradesh, Haryana, Punjab, Rajasthan (for private employees) and several North-Eastern states do not levy professional tax. Around 21 states and union territories do levy it, each with its own slabs.

Question 4

Is professional tax deductible from income tax?

Accepted Answer

Yes. PT paid during the year is allowed as a deduction from gross salary under Section 16(iii) when computing income from salary, so it reduces the employee's taxable income.

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