Professional Tax Registration & Filing

Yes — every employer in Andhra Pradesh who employs persons earning salary or wages is required to obtain a Certificate of Registration under Section 5 of the Andhra Pradesh Tax on Professions, Trades, Callings and Employments Act 1987. The employer must apply for registration within 30 days of becoming liable (i.e., within 30 days of making the first salary payment) in the prescribed form to the Commercial Tax Officer having jurisdiction over the place of business. The Act also requires self-employed professionals — including medical practitioners, lawyers, architects, and company secretaries earning above the exemption threshold — to obtain an Enrolment Certificate under Section 4 and pay professional tax on their own earnings. Failure to register results in a penalty under Section 21 of the Act.

The Andhra Pradesh Tax on Professions, Trades, Callings and Employments Act 1987 — as amended by subsequent AP Finance Acts — prescribes professional tax on employees based on monthly salary slabs. For FY 2025-26, salaries up to ₹15,000 per month are nil; between ₹15,001 and ₹20,000 attract ₹150 per month; and salaries above ₹20,000 attract ₹200 per month (effective rate, subject to latest AP Finance Act amendment). The maximum professional tax payable per employee per year is ₹2,500 per the constitutional cap under Article 276(2) of the Constitution of India. Employers must deduct professional tax from the employee's salary each month and deposit it to the state government on behalf of the employee.

Under Rule 13 of the Andhra Pradesh Profession Tax Rules 1987, an employer whose annual professional tax liability exceeds ₹50,000 must deposit tax monthly by the 10th of the following month. Employers with liability below ₹50,000 may deposit annually by June 30 of the assessment year. The employer must file the annual return in Form V under Rule 12 by June 30 each year, showing the total number of employees in each salary slab and the total tax deducted and remitted. Late payment of professional tax attracts interest at 1.25% per month under Section 18 of the AP Act, and late filing of returns attracts a penalty of ₹25 per day under Section 21. Returns are now filed on the AP Professions Tax portal operated by the Commercial Taxes Department of Andhra Pradesh.

Yes. Professional tax paid by an employee (whether paid directly or deducted by the employer from salary) is deductible from the employee's gross salary income under Section 16(iii) of the Income Tax Act 1961. This deduction is available on an actual payment basis — the professional tax must have been actually paid during the previous year. Where an employer pays professional tax on behalf of an employee without deducting it from the employee's salary, the amount so paid is includible as a perquisite under Section 17(2) read with Rule 3(7)(ix) of the Income Tax Rules 1962 and is simultaneously deductible under Section 16(iii). The employer is also allowed a deduction for its own professional tax payment as a business expenditure under Section 37(1) of the Income Tax Act 1961.

Yes. Section 3(2) and the Schedule to the Andhra Pradesh Tax on Professions, Trades, Callings and Employments Act 1987 exempt certain categories from professional tax, including: members of the Indian Armed Forces governed by the Army Act 1950, Navy Act 1957, or Air Force Act 1950; persons above 65 years of age; persons with a physical disability of 40% or more as certified by a competent medical authority; and parents or guardians of mentally disabled children. Employees earning below the minimum taxable salary slab are also effectively exempt by virtue of the nil rate. Furthermore, Article 276(1) of the Constitution exempts income from agriculture from levy of professional tax. Employers must maintain exemption documentation for each exempt employee and ensure they are not included in the professional tax return.