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How to Calculate Professional Tax on Salary and Registration Process

  • February 14, 2025
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  • Vishaal Consultancy Services
how to calculate professional tax on salary

Table of Content

Introduction
What is professional tax?
How to Calculate Professional Tax on Salary?
Example Calculation
Professional Tax Registration Process
Documents Required for Professional Tax Registration
Why Professional Tax Compliance Matters?
Conclusion
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Introduction

If you are a salaried employee of an organisation, you may have seen the word ‘Professional tax’ on your pay slips or the Form 16. But have you ever wondered what it actually is or how it is calculated? In this blog, we shall take a deep dive to understand how to calculate professional tax on salary, its process of registration, the necessary documents required for professional tax registration and shed some light on its importance.
First, let’s understand what professional tax is.

What is Professional Tax?

Professional tax is a tax that is imposed by the state on salaried employees and businesses. It is also applicable to professionals including doctors, lawyers and Chartered Accountants. The employers deduct it from the employee’s salary and pay it to the respective state government. Because professional tax is regulated by state governments, the tax slabs and the tax amount vary from state to state, but the maximum amount deducted from an employee’s gross salary is ₹2,500.

How to Calculate Professional Tax on Salary?

Now that you have a basic understanding of what professional tax is, it is beneficial to know how to calculate professional tax on salary. As mentioned earlier, the calculation varies from state to state, but here is the general process involved:

  1. Identify the State-Specific Applicability: Since each state levies different tax slabs, refer to the state-imposed slab and determine if you fall under its purview.
  2. Specify the Monthly Salary: As professional taxes are deducted from an employee’s monthly salary, ensure you correctly determine your monthly salary from the overall CTC.
  3. Apply the Relevant Tax Slab:There are different deductions for different income slabs. Identify the slab you fall into and determine the monthly deductibles.
  4. Consider Exemptions: Check if you are eligible for any exemptions based on factors like age, income, profession, and disabilities.
  5. Check the Deduction Frequency: In most states, PT is deducted monthly with a higher deduction in February or March as an additional annual payment component.
  6. Consult Resources: Since PT is deducted directly by the employer and is paid to the state, it is beneficial for you to consult a tax professional or refer to your state’s official tax website to seek clarity and stay updated.
how to calculate professional tax on salary

Example Calculation

Karnataka’s Professional Tax Slab

Monthly Salary (INR) Professional Tax (INR)
Up to 24,999 Nil
25,000 & Above 200

For instance, an employee in Karnataka earning 30,000 INR per month will have to pay ₹200 every month as professional tax. The total tax payable for the employee is:

₹200 ×12 months = ₹2,400 per year

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Professional Tax Registration Process

All employers and self-employed individuals must register for professional tax with their respective state authorities following the process below:

For Employers:

  1. Visit the official state portal: Go to the official website of your state’s professional tax department, such as https://pt.kar.nic.in/ for Karnataka.
  2. Register as an employer You have to create an account on the portal registering yourself as an employer and obtain your log-in credentials.
  3. Fill the forms: Log in using the new credentials and fill out the necessary forms providing details of your business, PAN, employee count, etc.
  4. Upload required documents: Submit the documents required for professional tax registration (listed in a section below) including identity proof, business certificates, etc.
  5. Pay registration fee (if applicable): Some states require an initial payment for the professional tax registration process.
  6. Obtain the professional tax registration certificate: Upon successful completion of the process, the tax authorities verify the details, once you clear this you are issued a Professional Tax Enrolment Certificate (PTEC) allowing you to deduct and remit professional tax.

For Self-employed Professionals

  1. Sign up on the professional tax website and log in, just like employers do.
  2. Submit your personal and professional details including the nature of your profession, PAN details, etc.
  3. Upload the necessary documents confirming your identity and business.
  4. Pay the tax as per the slab applicable to your income.
  5. Upon successful registration and verification, you receive your PTEC.
professional tax registration process

Documents Required for Professional Tax Registration

To complete the tax registration process, the following documents are required-

For Employers:

  • PAN card of the company/proprietor
  • Certificate of Incorporation or Business Registration Proof
  • Address proof of the business in form of the lease agreement or electricity bill
  • Identity proof of the employer/business owner, this could be Aadhar, Passport or Voter ID
  • Employee salary details
  • Necessary bank details
  • Board Resolution for Companies

For Self-employed Professionals:

  • PAN Card
  • Aadhar card or other identity proof
  • Proof of business establishment
  • Rental agreement or electricity bill for address verification
  • Professional qualifications and certificates (if applicable)
  • Bank account details
Documents Required for Professional Tax Registration

Why Professional Tax Compliance Matters?

If you fail to comply with the professional tax regulations, it could result in penalties and legal issues. All employers must prioritise timely deductions and payments to the state government to avoid fines. Self-employed professionals should register and remit their dues as per the prescribed schedule.
In Karnataka, failing to register, pay, or file returns could incur additional costs such as
Late Registration Penalty ₹5 per day
Late Payment 1.25% of interest per month on outstanding amount
Maximum Penalty for Late Payment 50% of the total outstanding amount
Late Filing of Returns Penalty ranging from ₹1,000-₹2,000

Due dates for professional tax payments for Karnataka

Category Due Date
Monthly PT Payment 20th of the following month
Annual PT Payment for self-employed professionals 30th April of every financial year

Conclusion

Staying on top of professional tax is not just about avoiding legal consequences or penalties, but about ensuring that your business operates smoothly without compliance issues. Whether you are managing payrolls as an employer or filing the taxes as a self-employed professional, maintaining proper compliance is essential.

This is where Vishaal Consultancy Services steps in. We simplify professional tax compliance by guiding you through how to calculate professional tax on salary and making your professional tax registration process stress-free. With our expertise, you can concentrate on what you excel at while we take care of the tax responsibilities. Contact us today and take the burden off your plate.

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