Anyone who earns above a given tax slab has to pay taxes. There are different types of taxations on your income. One of them is professional tax. Professional tax refers to the tax imposed by the state government which charges a percentage of your income for the infrastructure it provides you. Since it is a tax imposed by the state, it varies from one state to another. But there is a professional tax slab for each state on the basis of which you can figure out how much you have to pay as taxes. The tax levied on your income or salary is usually deducted by your employer from the salary. Your salary slip will give you an idea about the professional tax slab you fall under and how much money is deducted as tax. Click here to find more information on professional tax.

Importance of Professional Tax 

Just like any other taxation or deductions, the professional tax also plays a key role in the economy of the country. But this taxation holds special importance in numerous ways. Some of them are as follows: 

State Tax

As already mentioned, professional tax is a state tax. It helps the state in providing the services and infrastructure that you use on a day to day basis. One of the reasons for the states to run efficiently is professional tax. 

Exemption from Taxation 

Professional tax is considered as a deduction and therefore can be presented as an exemption from taxation. What this implies is that you can show professional tax as a deduction from your salary slip while filing for income tax. 

Almost Everyone is Liable

Almost every earning person falls under this category. Whether you are an employee or an employer or a professional, you are liable to pay professional taxes. It can be deposited in any legislative body of the state be it a local municipal corporation or district board. 

Three Times Higher Penalty

In case you fail to pay your professional tax on time or provide wrong information, you are liable to pay a penalty of as much as three times your tax obligation. So, it is important that you take the professional tax seriously and pay it on time with the right details to avoid any fines. 

States Where Professional Tax is Applicable

Not every state follows the rule of professional tax. The states where professional tax and professional tax slab are applicable includes: 

• Andhra Pradesh 
• Gujarat
• Karnataka
• Madhya Pradesh 
• Maharashtra 
• New Delhi
• Tamil Nadu
• West Bengal 

Professional Tax Slab 

The professional tax slab for professional tax differs from state to state. The reason for this is that each state has different slabs for taxation. So depending on the state you are in, your professional tax slab is also going to be different. But the good thing about professional tax is that it cannot be above the maximum amount of Rs 2500 for an individual. 

How to Claim Deductions on Income Tax?

Since professional tax is a form of a deduction from your salary, you can claim deductions for it. To do so, you have to file the expense in your Income Tax form. The deduction for professionals will feature under Income Tax Act, 1961 and from sections 80C to 80U. The procedure is just as simple as filing an income tax. The only difference here is that you have to specifically mention the professional tax or enter the salary slip details which automatically have professional tax deducted. 

You can claim a deduction on professional tax in your Income Tax form. 

Exemptions in Professional Tax

Not every person is entitled to pay professional tax. There are certain provisions in the law that allow some people from not paying professional tax. The exemptions for professional tax are as follows: 

• Teaching Institution: Individual who has a teaching institution for students up to class twelfth does not have to pay professional tax.
• Handicapped Person: A handicapped person with 40% or above disability is also exempted from professional tax. But in order to claim for exemption, he or she will be required to show the necessary documents. 
• Disabled Person: A person who is dumb, deaf or blind but is still managing to earn an income is also exempted from professional tax. 
• CPMF: Those who are in the Central Para Military Force are exempted from paying any professional tax.  
• Single Child-Parent: A parent can also be exempt from professional tax provided he has a single child and has gone through a sterilization operation. With the necessary certificate and documents, he will be provided the exemption from this tax.
• Armed Forces: Members who are part of the armed forces are also entitled to be exempt from professional tax. Both combatant and non-combatant personnel get this benefit. 

Professional tax is an important source of revenue for the Indian states, and all salaried and earning individuals except the ones who fall under the category of exemption should be clear about this tax. The taxation amount is low and you can always claim a deduction for it. Also, you should make it a point to check the professional tax slab of your state so as to be sure about your professional tax rate.