Professional Tax | Meaning and Definition

What is a Professional Tax? 

A professional tax is a tax paid by someone who makes money from their profession and is required to pay a certain amount to the government. This type of tax is imposed regardless of the individual’s occupation. House rent allowance, transfer, professional tax, and other deductions are common. 

Professional taxation has a maximum ceiling of Rs.2500 per year, which varies by state.

Why does it differ from one state to the next? Since the professional tax is imposed by the state authority, this is the case. Some states/union territories, on the other hand, do not levy a professional tax. The professional tax could be paid over a year in 12 equal installments.

In some circumstances, employers subtract their employees’ professional taxes from their monthly salaries and file their taxes with the authorities. They may face penalties if they fail to do so, as failing to comply with professional tax is a serious offense.