Professional tax is the smallest line on an Indian payslip and the one most likely to be wrong. It rarely exceeds ₹200 a month, which is why nobody checks it, and it is set by 22 different state governments on four different bases, which is why it drifts.
If you run payroll in one state you can learn your slab once and forget it. If you have people in five states you have five sets of slabs, five registration numbers and five due dates, and the first sign that one has slipped is usually a notice.
The one rule every state shares
Article 276 of the Constitution lets states tax professions, trades, callings and employments, and in the same breath limits what they can collect: ₹2,500 per person per year. That ceiling has not moved since 1988, when the Sixtieth Amendment raised it from ₹250.
It is a useful sanity check. If your payroll system produces an annual professional tax figure above ₹2,500 for one employee in one state, the calculation is wrong, whatever the slab table appears to say. Several states are built to land exactly on the cap, which is why Maharashtra charges ₹200 for eleven months and ₹300 in February.
Professional tax follows the place of work, not the head office and not the employee's home state. A Bengaluru office with a Delhi head office deducts under Karnataka rules.
Which states levy professional tax, and which do not
The levying states are Andhra Pradesh, Assam, Bihar, Chhattisgarh, Gujarat, Jharkhand, Karnataka, Kerala, Madhya Pradesh, Maharashtra, Manipur, Meghalaya, Mizoram, Nagaland, Odisha, Puducherry, Punjab, Sikkim, Tamil Nadu, Telangana, Tripura and West Bengal.
The ones that do not levy it are worth knowing precisely, because this is where employers over-deduct out of habit. There is no professional tax in Delhi, Haryana, Uttar Pradesh, Uttarakhand, Rajasthan, Himachal Pradesh, Goa, Arunachal Pradesh, Jammu and Kashmir, Ladakh, Chandigarh, Andaman and Nicobar Islands, Dadra and Nagar Haveli, Daman and Diu, or Lakshadweep.
So a company headquartered in Gurugram with staff only in Haryana has nothing to deduct and nothing to register for. The same company opening a Pune office picks up a full Maharashtra obligation from the first employee it puts there.
State-wise professional tax slabs
Most states slab on gross monthly salary and the numbers below are per month. Treat this as a working reference rather than the last word: states revise slabs in their annual budgets, and the exemption thresholds in particular have moved several times in the last few years.
| State | Nil up to (monthly) | Top rate (monthly) | Annual total |
|---|---|---|---|
| Maharashtra | ₹7,500 (₹25,000 for women) | ₹200, and ₹300 in February | ₹2,500 |
| Karnataka | ₹24,999 | ₹200 | ₹2,400 |
| West Bengal | ₹10,000 | ₹200 above ₹40,000 | ₹2,400 |
| Telangana | ₹15,000 | ₹200 above ₹20,000 | ₹2,400 |
| Andhra Pradesh | ₹15,000 | ₹200 above ₹20,000 | ₹2,400 |
| Gujarat | ₹12,000 | ₹200 | ₹2,400 |
| Assam | ₹10,000 | ₹208 above ₹25,000 | ₹2,496 |
| Sikkim | ₹20,000 | ₹200 above ₹40,000 | ₹2,400 |
| Punjab | Below the income tax threshold | ₹200 | ₹2,400 |
Two of those rows deserve a note. Maharashtra raised the exemption for women to ₹25,000 a month from April 2023, so a woman earning ₹22,000 in Mumbai pays nothing while a man on the same salary pays ₹200 a month. Punjab does not slab on salary at all: its State Development Tax is a flat ₹200 a month on anyone whose income is above the income tax exemption limit.
The states that do not fit the monthly pattern
Four states work off annual income rather than monthly salary. Bihar, Jharkhand, Madhya Pradesh and Odisha all set their slabs on what the person earns in the year, then collect it monthly or in instalments. Bihar, for example, exempts annual income up to ₹3,00,000 and charges ₹2,500 a year only above ₹10,00,000, so a mid-level salary can attract nothing at all.
Tamil Nadu and Kerala are the genuine outliers. In both, professional tax is collected by the local body rather than the state commercial taxes department, and it is assessed half-yearly. Tamil Nadu exempts half-yearly income up to ₹21,000 and tops out at ₹1,250 per half year, which is how it reaches the ₹2,500 cap. Kerala runs a longer ladder of half-yearly slabs administered by each municipality or panchayat, so two offices in different Kerala municipalities file with different authorities.
The practical consequence: if you have staff in Chennai or Kochi, do not expect your payroll vendor's standard monthly deduction logic to be right by default. Ask specifically how it handles half-yearly assessment and which local body it files with.
Registration: PTEC and PTRC
Employers need two separate registrations in each levying state where they have a presence, and they cover different things.
- The enrolment certificate, PTEC in Maharashtra, covers the entity's own professional tax as a business, typically a flat ₹2,500 a year
- The registration certificate, PTRC, is what lets you deduct professional tax from employees' salaries and pay it over
- Both are per state, so five states with staff means five sets, filed and renewed separately
- Application is usually due within 30 days of becoming liable, which for a new office means 30 days from the first employee's joining date
Directors, partners and professionals practising on their own account are separately enrolled in their own name in most states. A consultant billing from Bengaluru has a Karnataka enrolment liability regardless of whether they employ anyone.
Due dates, and what late payment costs
Dates vary by state, and in some states by the size of your liability. Maharashtra is the usual example: an employer whose professional tax liability in the previous year was below ₹50,000 files annually by 31 March, while one at or above ₹50,000 files and pays monthly. Karnataka takes monthly payment by the 20th, West Bengal by the 21st of the following month.
Interest on late payment generally runs at 1.25 per cent a month, with a penalty on top for a late return, commonly ₹200 or ₹300 per return in the states that specify one. The amounts are small in isolation. What makes them expensive is that they accrue per state, per return, and usually go unnoticed for several quarters, so the assessment that eventually arrives covers a dozen periods at once.
Since the dates genuinely differ, the only reliable approach is one calendar entry per state rather than a single professional tax reminder. Confirm each state's current date on its commercial taxes portal before you set it.
Who is exempt
Exemptions are state-specific, but a common core appears in most states. Persons with a disability of 40 per cent or more, parents or guardians of a child with a disability, serving members of the armed forces, and senior citizens above a stated age, which is 65 in Karnataka.
Some states add their own. Maharashtra exempts badli workers in the textile industry and women working only as agents under the Mahila Pradhan Kshetriya Bachat Yojana. Where an exemption is claimed, keep the supporting certificate on the employee's file. In an assessment, an undocumented exemption is treated as a short deduction, and the employer pays it.
Remote employees and whose rules apply
This is the question that has no clean answer yet. The statutes were written for an employee who works at a place of business in the state, and remote work does not map onto that neatly.
What most employers do in practice is deduct based on the office the employee is formally attached to, which keeps the deduction consistent with the state where they hold a registration. That is defensible, but it is a position rather than a settled rule, and a state can argue the employee is working within its territory. If you have a significant number of people working permanently from a state where you hold no registration and have no office, that is worth a specific opinion from your advisor rather than an assumption either way.
What professional tax does to take-home pay
At a maximum of ₹2,500 a year the direct cost is small, and part of it comes back. Professional tax paid is deductible from salary income under Section 16(iii) of the Income Tax Act, so it reduces taxable salary for anyone filing under the old regime.
Under the new regime there is no such deduction. The standard deduction is available but the Section 16(iii) claim is not, so for employees on the new regime professional tax is a straight reduction in take-home with no tax offset. It is a minor point in rupee terms and a frequent source of a query when someone compares two payslips and finds the arithmetic does not match.
Frequently asked questions
What is the maximum professional tax in India?
₹2,500 per person per year. Article 276 of the Constitution caps it, so no state can charge more regardless of salary.
Which states do not levy professional tax?
Delhi, Haryana, Uttar Pradesh, Uttarakhand, Rajasthan, Himachal Pradesh, Goa, Arunachal Pradesh, Jammu and Kashmir, Ladakh, Chandigarh and several union territories including the Andaman and Nicobar Islands, Dadra and Nagar Haveli, Daman and Diu and Lakshadweep.
Which state's professional tax applies if my head office is in Delhi and my employee works in Bengaluru?
Karnataka's. Professional tax follows the place of work, so you need a Karnataka registration even though Delhi levies no professional tax at all.
Is professional tax calculated on gross or net salary?
On gross monthly salary in most states. Bihar, Jharkhand, Madhya Pradesh and Odisha slab on annual income instead, and Tamil Nadu and Kerala assess half-yearly income through the local body.
What is the difference between PTEC and PTRC?
PTEC covers the business's own professional tax liability, usually a flat ₹2,500 a year. PTRC is the registration that allows you to deduct professional tax from employees and pay it to the state. Employers need both.
Can I claim professional tax as a deduction in my income tax return?
Yes under the old regime, as a deduction from salary income under Section 16(iii). The new regime does not allow it.
What happens if an employer does not deduct professional tax?
The employer becomes liable for the amount that should have been deducted, plus interest at around 1.25 per cent a month and a penalty per late return. Liability sits with the employer, not the employee.
If you are setting up payroll in a new state, the sequence is short: check whether the state levies professional tax at all, apply for both certificates within 30 days of your first employee joining, load that state's slab on that state's basis, and put its due date in the calendar as its own entry. If you already run multi-state payroll, the two things worth auditing are states you have staff in but no registration for, and exemptions being applied without a certificate behind them.
