Glossary
What is professional tax?
What professional tax is, why it differs from state to state, and how an employer deducts it and pays it to the state or local body.
Updated
In short
Professional tax is a tax on employment that some Indian states levy and employers deduct from salary. In SimpleERP, PT is a fixed payslip deduction you set per employee, posted to Statutory Deductions Payable.
Professional tax is a tax on employment, trades and professions levied by some Indian states and, in some, by local bodies. Employers deduct it from salaries and pay it to the state or local body. Slabs, amounts and whether it is deducted monthly or half-yearly differ by state, some states levy none, and the Constitution caps it at ₹2,500 a year per person.
Professional tax (PT): a worked example
Tamil Nadu collects professional tax half-yearly, on slabs notified by each local body. Karthik R at Lakshmi Steel Furnitures earns ₹30,000 a month, so his income for April to September 2026 is ₹1,80,000. For illustration, take his PT for that half year as ₹1,250, a top-slab figure; check your local body's current slabs.
| Way to record it | April to August payslips | September payslip | Half-year total |
|---|---|---|---|
| Deduct in the month it falls due | ₹0 | ₹1,250 | ₹1,250 |
| Spread evenly across the months | ₹208.33 each | ₹208.35 | ₹1,250 |
Which states do not levy professional tax?
Several states and union territories, including Delhi, Haryana, Rajasthan and Uttar Pradesh at the time of writing, do not levy professional tax. A business with staff in more than one state follows each state's rules for the employees who work there. Lists change; check the current rules.
FAQ
Questions, answered
Who pays professional tax, the employer or the employee?
The employee bears it and the employer deducts it from salary and pays it to the state or local body. In many states the employer also registers and pays professional tax for the business itself, which is a separate liability.
Is professional tax deducted every month?
Professional tax timing depends on the state. Some deduct a fixed amount monthly, often with a different amount in one month to reach the annual figure. Tamil Nadu collects it half-yearly. Follow your state's schedule as notified, and check the current rules each year.
What is the maximum professional tax in India?
The Constitution caps professional tax at ₹2,500 a year per person. Each state sets slabs below that cap, so the amount an employee pays depends on their salary and the state they work in.
Does SimpleERP calculate professional tax from slabs?
SimpleERP does not calculate professional tax from slabs. You set the PT amount for each employee as a fixed deduction, and you can adjust the line on any month's payslip. SimpleERP posts the amount to Statutory Deductions Payable and totals it in the component summary report for your payment.
Related
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Statutory deductions
Deductions from salary required by law, such as PF, ESI, professional tax and TDS, held as liabilities until paid.
Read moreTDS on salary
Income tax the employer deducts from monthly pay, based on the employee's estimated tax for the year.
Read moreSalary structure in India
Basic, HRA, allowances, PF, professional tax and TDS explained as concepts, with a worked payslip and a loss-of-pay example.
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