Professional Tax in India: State-by-State Rates, Slabs, and Employer Obligations

What Is Professional Tax?

Professional Tax (PT) is a state-level tax levied on salaried employees and professionals in India. Despite its name, it applies to all salaried individuals, not just professionals. It’s deducted from the employee’s gross salary by the employer and deposited with the respective state government.

Professional Tax is authorized by Article 276 of the Indian Constitution, which also sets a maximum cap of ₹2,500 per person per year.

Which States Levy Professional Tax?

Not all Indian states impose Professional Tax. This is a critical detail that global EOR providers sometimes miss, leading to either incorrect deductions (deducting PT in states that don’t levy it) or non-compliance (failing to deduct in states that do).

States That Levy Professional Tax

State	Status	Filing Frequency
Maharashtra	Active	Monthly
Karnataka	Active	Monthly
West Bengal	Active	Monthly
Andhra Pradesh	Active	Monthly
Telangana	Active	Monthly
Tamil Nadu	Active	Half-yearly
Gujarat	Active	Monthly
Kerala	Active	Half-yearly
Madhya Pradesh	Active	Monthly
Odisha	Active	Monthly or yearly
Assam	Active	Monthly
Meghalaya	Active	Yearly
Tripura	Active	Monthly
Jharkhand	Active	Monthly
Bihar	Active	Monthly
Sikkim	Active	Monthly
Manipur	Active	Monthly
Mizoram	Active	Monthly

States and Territories Without Professional Tax

State/Territory
Delhi
Haryana
Uttar Pradesh
Rajasthan
Uttarakhand
Punjab
Himachal Pradesh
Jammu & Kashmir
Goa
Chandigarh

Important: If your employee is based in Delhi, Haryana, or Rajasthan, no Professional Tax applies. If they move to Karnataka or Maharashtra, Professional Tax kicks in immediately. Your EOR or payroll system must track employee work locations and apply the correct rules.

State-by-State Rate Details

Maharashtra

Maharashtra has the most detailed PT slab structure:

Monthly Gross Salary (₹)	Monthly PT (₹)
Up to 7,500	Nil
7,501 – 10,000	175
Above 10,000	200 (₹300 in February)

Annual total: ₹2,500 (11 months × ₹200 + February ₹300)

Note: Maharashtra is the only state where the February deduction is higher to reach the annual cap of ₹2,500. This is a common source of payroll errors — if your system doesn’t account for the February adjustment, the annual total will be off.

Karnataka

Karnataka uses a simpler structure:

Monthly Gross Salary (₹)	Monthly PT (₹)
Up to 15,000	Nil
Above 15,000	200

Annual total: ₹2,400

Karnataka’s flat ₹200 rate for all salaries above ₹15,000 makes it straightforward to administer.

West Bengal

Monthly Gross Salary (₹)	Monthly PT (₹)
Up to 10,000	Nil
10,001 – 15,000	110
15,001 – 25,000	130
25,001 – 40,000	150
Above 40,000	200

Telangana

Monthly Gross Salary (₹)	Monthly PT (₹)
Up to 15,000	Nil
15,001 – 20,000	150
Above 20,000	200

Tamil Nadu

Tamil Nadu collects PT on a half-yearly basis:

Half-Yearly Gross Salary (₹)	Half-Yearly PT (₹)
Up to 21,000	Nil
21,001 – 30,000	135
30,001 – 45,000	315
45,001 – 60,000	690
60,001 – 75,000	1,025
Above 75,000	1,250

Annual maximum: ₹2,500

Gujarat

Monthly Gross Salary (₹)	Monthly PT (₹)
Up to 5,999	Nil
6,000 – 8,999	80
9,000 – 11,999	150
Above 12,000	200

Andhra Pradesh

Monthly Gross Salary (₹)	Monthly PT (₹)
Up to 15,000	Nil
15,001 – 20,000	150
Above 20,000	200

Employer Obligations

Registration

Every employer with employees in a PT-applicable state must register with that state’s PT authority. This applies per state — if you have employees in Maharashtra and Karnataka, you need separate registrations in both.

Registration requirements:

• Application to the respective state’s Commercial Tax or Municipal Corporation office
• Company PAN and incorporation documents
• Details of employees in the state
• Bank account details for payment

Timeline: Registration must typically be completed within 30 days of hiring the first employee in that state.

Deduction and Deposit

The employer is responsible for:

1. Deducting PT from employee salary each month (or half-year, depending on the state)
2. Depositing the collected PT with the state government within the prescribed due date
3. Filing periodic returns (monthly, quarterly, or half-yearly depending on the state)

Due Dates

State	Deposit Due Date	Return Due Date
Maharashtra	Last day of the month	March 31 annually
Karnataka	20th of the following month	Monthly (with challan)
West Bengal	21st of the following month	Monthly
Telangana	10th of the following month	Monthly
Tamil Nadu	April 30 / October 31 (half-yearly)	Half-yearly
Gujarat	15th of the following month	Monthly

Penalties for Non-Compliance

• Late deposit interest: Ranges from 1.25% to 2% per month depending on the state
• Penalty for non-registration: Varies by state; Maharashtra can impose a penalty equal to the PT amount due
• Penalty for incorrect deduction: Employer may be liable for the shortfall plus interest

Professional Tax and the New Labour Codes

The Code on Wages, 2019 (one of the four new labour codes) redefines “wages” in a way that could affect PT calculations. Under the new code, wages must constitute at least 50% of total remuneration. If this changes how gross salary is computed, PT slab applicability could shift for some employees.

As of 2026, most states have not yet fully implemented the new labour code definitions for PT purposes. However, this is an area to watch — when states adopt the new definitions, PT calculations may need to be updated.

How Professional Tax Interacts with Income Tax

Professional Tax paid is fully deductible from the employee’s taxable income under both the old and new tax regimes. This means:

• PT reduces the employee’s taxable income for income tax purposes
• The employer should account for PT as a deduction when calculating TDS
• The deduction is available under Section 16(iii) of the Income Tax Act

For an employee paying ₹2,500/year in PT, the actual cost is lower because it reduces their income tax by ₹500–₹750 (depending on their tax bracket).

Common Mistakes

1. Applying the Wrong State’s Rates

An employee based in Hyderabad (Telangana) should have Telangana PT rates applied, not Andhra Pradesh — even though the two states were once one. The rates and slabs differ.

2. Not Adjusting for the Maharashtra February Rule

Maharashtra’s February deduction of ₹300 (instead of ₹200) is frequently missed, leading to an annual PT shortfall of ₹100 per employee.

3. Not Registering in Each State

Having a PAN-India registration doesn’t exempt you from state-level PT registration. Each state requires its own registration, filing, and payment.

4. Deducting PT in States That Don’t Levy It

Employees in Delhi, Haryana, Rajasthan, and other non-PT states should not have any Professional Tax deducted. Incorrectly deducting PT results in excess withholding and employee complaints.

5. Ignoring PT When Employees Relocate

When an employee moves from a non-PT state (Delhi) to a PT state (Karnataka), Professional Tax must be applied from the month of relocation. Similarly, moving from one PT state to another requires switching to the new state’s rates and registration.

Key Takeaways

• Professional Tax is a state-level obligation — not all states levy it, and rates vary significantly
• Maximum annual PT is ₹2,500 per employee (constitutional cap)
• Employer must register separately in each state where they have employees
• PT is deductible from taxable income, partially offsetting the cost
• Track employee work locations carefully — PT rules change when employees relocate
• Maharashtra’s February adjustment and Tamil Nadu’s half-yearly collection are common sources of errors