WHO IS REQUIRED TO PAY PROFESSIONAL TAX AND WHO ISN'T?

The word ‘Professional Tax’ appears at one of the top positions in the salary slip (in the case of salaried persons). Hence, many people do wonder what this Professional tax actually is and who exactly is required to pay this tax and who is not. As explained above, Professional Tax is an indirect state tax, imposed by some of the state governments in India.

Now, let us have a clear look into the matter as to who is required to pay Professional Tax and who is not required to do so.

Those who are required to pay Professional Tax:-

Almost every individual who earns needs to pay some amount as Professional Tax. This can be explained in simpler words as further. Any person involved in any form of business, employment, or practicing any other profession needs to pay Professional Tax to the concerned state government. However, these persons are categorized into different classes as follows:-

• Freelancers who work without employing anyone else
• People who earn their salary by being employed under any concern or person
• People who own a business or a trade
• Practicing professionals who earn their income by practicing professions like lawyer, doctor, Chartered Accountant (CA), Company Secretary (CS)

All such individuals are subject to paying Professional Tax to the state government.

Exemptions from paying Professional Tax:-

As discussed above, generally every earning individual needs to pay Professional Tax. However, there are certain categories of people who are exempted from paying Professional Tax. The criteria specifying the people who don’t need to pay Professional Tax varies from one state to another. However, some of the common criteria denoting people who are not required to pay Professional Tax are as follows:-

• Parents or guardians of persons having any kind of permanent physical or mental disability
• Any person who is suffering from some permanent physical disability, including blindness
• Any person who is aged above 65 years
• ‘Badli’ workers, working in the textile industries
• Members of the forces as described in the Army Act, 1950; the Air Force Act, 1950 and the Navy Act, 1957
• Women solely involved as agents under the Mahila Pradhan Kshetriya Bachat Yojana or Director of Small Savings

The people falling under one or more of these categories do not need to pay any Professional Tax to the government.

The difference between Professional Tax and Income Tax is that - Income Tax is levied by the Central Government, whereas Professional Tax is imposed by the State Government. Hence, the laws and regulations, the penalties pertaining to Professional Tax are decided by the respective State Governments separately and consequently may vary from one state to another. Also, there are some states in India that have not levied Professional tax yet on their residents. Thus, to carry out any business or any profession in any such state, one is not required to pay any Professional Tax. So, that can also be considered as an exemption from paying Professional Tax.