Professional tax is the tax levied and collected by the state governments in India. It is an indirect tax. A person earning an income from salary or anyone practicing a profession such as chartered accountant, company secretary, lawyer, doctor, etc. ... It is a source of revenue for the government.
A few states that do not levy this tax are Haryana, New Delhi, Rajasthan, and Arunachal Pradesh. A few states that levy this tax are Karnataka, Andhra Pradesh, Madhya Pradesh, West Bengal, Telangana, Maharashtra, Assam, Meghalaya, and Tamil Nadu.
Professional Tax is deducted by the employers for the salaried employees and the same is deposited with the State Government. The tax must be collected and deposited as per the timeline provided by the respective State Government. In case, one fails to do so, a penalty and late fee are applicable as per the Act.
The Tax may be paid to the Government on a Monthly, Quarterly, Semi-Annually, or Annual basis as per State Laws. Professional Tax Return needs to be filed at the end of the Financial Year as applicable.
The maximum PT deduction allowed u/s 16v(iii) of the Income Tax Act is Rs. 2,500/-.