Question 1

Which states levy Professional Tax and what is the maximum?

Accepted Answer

Professional Tax is a state levy — Article 276 of the Constitution caps it at ₹2,500 per person per year. States levying PT include Maharashtra (up to ₹2,500/year, monthly salary slab), Karnataka (up to ₹2,400/year), Andhra Pradesh and Telangana (up to ₹2,500/year), West Bengal, Tamil Nadu (₹750/year flat), Gujarat, and Assam. Delhi, Haryana, Rajasthan, and Uttar Pradesh do not levy PT.

Question 2

Who must deduct and remit Professional Tax?

Accepted Answer

Employers must deduct PT from employees' salaries and remit to the state authority. The employer also pays PT on its own account as a registered business. Late remittance attracts penalty — in Maharashtra, 10% of the outstanding amount plus 1.25% interest per month under the Maharashtra State Tax on Professions, Trades, Callings and Employments Act 1975.

Question 3

Is Professional Tax deductible for income tax?

Accepted Answer

Yes — Section 16(iii) of the Income Tax Act allows employees to deduct the PT actually paid during the year from gross salary. Employers deduct their own PT liability as a business expense under Section 37(1). The deduction is for PT paid, not merely deducted — timing matters for the AY in which the deduction is claimed.

Question 4

What registrations and returns are required?

Accepted Answer

Maharashtra: Employer Registration Certificate (EC) within 30 days of employing staff; monthly challan by month-end if annual liability ≥ ₹50,000, otherwise annual return by 31 March. Karnataka: EC registration plus monthly e-payment and return. Multi-state employers need a separate registration in each state — there is no central PT regime.

Question 5

Are working directors of a private limited company liable?

Accepted Answer

Yes. Working directors drawing remuneration are treated as employees — PT must be deducted from their remuneration on the applicable slab. The company separately pays PT as a business entity. In Maharashtra this means ₹2,500/year as employer PT plus deduction of PT from each director's monthly remuneration.

Professional Tax Compliance

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