What Is Professional Tax, and Who Has to Pay It?
Professional tax is a state levy on anyone who earns from a profession, trade, calling or employment, capped by the Constitution at INR 2,500 per person per year. Employers deduct it from salaries and deposit it. The self-employed pay their own.
The power comes from Article 276 of the Constitution, which lets a state tax employment income without that being treated as a tax on income. The INR 2,500 ceiling is written into Article 276(2) itself.
Two things changed for FY 2026-27 that most published guides have not caught up with.
Odisha abolished professional tax by ordinance, with effect from 1 April 2026. And Karnataka’s annual total is no longer INR 2,400, because February is now charged at a higher rate.
One thing that did not change. The four Labour Codes that took effect on 21 November 2025 did not touch professional tax. Those Codes consolidate central labour laws, and professional tax is a state tax statute. In fact the Code on Wages expressly permits the deduction.
For the wider picture, see how India’s new Labour Codes affect payroll compliance.
Is Professional Tax Deductible From Income Tax?
Yes, in full, but only if the employee is on the old regime. The section number changed on 1 April 2026, and this is the single most common error in published content.
Professional tax paid is deductible from salary income under section 19(1), Table Serial Number 1 of the Income-tax Act, 2025. Under the old Income Tax Act, 1961, this was section 16(iii).
There is no monetary cap on the deduction. The statute allows the entire amount paid.
The catch is section 202(2)(a) of the 2025 Act, which disallows this deduction under the default regime. An employee who has not opted out of the default regime gets no benefit from it.
Which States Charge Professional Tax in FY 2026-27?
Around twenty states and union territories levy it, and the list changed this year. Odisha left it. Punjab is on it, despite appearing on most published “no professional tax” lists.
Punjab is missed because its statute is called the Punjab State Development Tax Act, 2018, not a professional tax act. It still functions as one.
| Status | Jurisdictions |
|---|---|
| No professional tax | Delhi, Haryana, Uttar Pradesh, Rajasthan, Uttarakhand, Himachal Pradesh, Chandigarh, Goa, Jammu and Kashmir, Arunachal Pradesh, and Odisha from 1 April 2026 |
| Levies, but often misreported as not levying | Punjab, under the State Development Tax Act, 2018 |
| Position unconfirmed | Ladakh, Andaman and Nicobar Islands, Lakshadweep, Dadra and Nagar Haveli and Daman and Diu |
What happened in Odisha?
The Odisha State Tax on Professions, Trades, Callings and Employments (Repeal) Ordinance, 2026, Ordinance 02 of 2026, was gazetted on 21 April 2026 with effect from 1 April 2026. The Finance Department then wrote to all drawing and disbursing officers, directing them to stop deducting.
A word of caution. This is an ordinance under Article 213 that ceases to operate unless the State Legislature enacts it into an Act. Verify the status from the Law Department of Odisha before considering the repeal permanent.
The repeal also carries a savings clause. Any liability, payment or return for a period before 1 April 2026 still stands, and arrears remain recoverable.
So deductions stop from April 2026, but earlier filings do not go away. Employers who kept deducting through this financial year have over-deducted and need to reconcile.
What Are the Professional Tax Slabs by State?
Slabs are set by each state and revised at different times, so a table without effective dates is close to useless. The dates below are the points of this table.
Note that not every state assesses monthly. Madhya Pradesh, Bihar and Manipur charge on annual income. Tamil Nadu, Kerala and Puducherry assess on half-yearly income through local bodies.
| State | Slab | Tax | Effective from |
|---|---|---|---|
| Maharashtra | Up to ₹7,500/mo | Nil | 1 Apr 2023 |
| ₹7,501 to ₹10,000/mo | ₹175/mo | ||
| Above ₹10,000/mo | ₹200/mo, ₹300 in February | ||
| Women up to ₹25,000/mo | Nil | ||
| Karnataka | Below ₹25,000/mo | Nil | 1 Apr 2023 |
| ₹25,000/mo and above | ₹200/mo, ₹300 in February | Feb rate from Apr 2025, per the 2025-26 State Budget | |
| West Bengal | Up to ₹10,000/mo | Nil | 1 Apr 2014 |
| ₹10,001 to ₹15,000 | ₹110/mo | nil band from 1 Aug 2016 | |
| ₹15,001 to ₹25,000 | ₹130/mo | ||
| ₹25,001 to ₹40,000 | ₹150/mo | ||
| Above ₹40,000 | ₹200/mo | ||
| Gujarat | Up to ₹12,000/mo | Nil | 1 Apr 2022 |
| Above ₹12,000/mo | ₹200/mo | ||
| Telangana | Up to ₹15,000/mo | Nil | 6 Feb 2013 |
| and Andhra Pradesh | ₹15,001 to ₹20,000 | ₹150/mo | (identical slabs) |
| Above ₹20,000 | ₹200/mo | ||
| Madhya Pradesh | Up to ₹2,25,000/year | Nil | 1 Apr 2018 |
| ₹2,25,001 to ₹3,00,000 | ₹1,500/year | ||
| ₹3,00,001 to ₹4,00,000 | ₹2,000/year | ||
| Above ₹4,00,000 | ₹2,500/year | ||
| Bihar | Up to ₹3,00,000/year | Nil | 2011 Act |
| ₹3,00,001 to ₹5,00,000 | ₹1,000/year | ||
| ₹5,00,001 to ₹10,00,000 | ₹2,000/year | ||
| Above ₹10,00,000 | ₹2,500/year | ||
| Punjab | Taxable income above the income tax exemption limit | ₹200/mo flat | 2018 Act |
| Tamil Nadu (Greater Chennai) | Up to ₹21,000/half-year | Nil | Second half of FY 2024-25 |
| ₹21,001 to ₹30,000 | ₹180 | ||
| ₹30,001 to ₹45,000 | ₹425 | ||
| ₹45,001 to ₹60,000 | ₹930 | ||
| ₹60,001 to ₹75,000 | ₹1,025 | ||
| Above ₹75,000 | ₹1,250 | ||
| Kerala (maximums) | Below ₹12,000/half-year | Nil | 1996 and 2005 Rules |
| Rising by band to ₹1,25,000+ | Up to ₹1,250/half-year | ||
| Puducherry | Up to ₹99,999/half-year | Nil | Municipalities Act 1973 |
| ₹1,00,000 to ₹2,00,000 | ₹250 | ||
| Rising by band to ₹5,00,001+ | ₹1,250 | ||
| Manipur | Up to ₹50,000/year | Nil | 2012 amendment |
| Rising by band above ₹1,25,000 | ₹1,200 to ₹2,500/year | ||
| Mizoram | Up to ₹5,000/mo | Nil | 11 Jul 2024 |
| Rising by band above ₹20,000 | ₹75 to ₹208/mo | ||
| Odisha | Abolished by ordinance | Nil | 1 Apr 2026 |
Four warnings attached to this table.
Karnataka’s own portal still hosts the superseded 2023 schedule showing a flat INR 200 a month. Anyone verifying there will confirm the wrong annual figure. February is INR 300.
There is no uniform slab across Tamil Nadu State. Each individual unit prepares their own slab within a statutory minimum, and those for Coimbatore and Chennai city do not match. The Tamil Nadu state website portal provides a pre-2024 table for Chennai city.
Kerala’s figures are statutory maximums that each local body may levy up to, not fixed rates. Most levy the maximum, but the distinction matters.
Madhya Pradesh, Bihar and Manipur set the tax as an annual amount. Monthly deduction is a payroll convention, not the statutory rate.
States where we are not printing a figure
Sources for the states below could not be reconciled against a government source, and several state tax portals were unreachable. Confirm the current rate with the department before configuring payroll.
| State | Position |
|---|---|
| Assam | Structure revised 1 April 2025. Nil up to ₹15,000, ₹180 to ₹24,999. Top rate reported as either ₹208 or ₹200. Confirm |
| Meghalaya | The 2022 amendment deleted the Schedule from the Act. Rates now sit in a separate notification. The exemption threshold was reportedly raised to ₹1.8 lakh a year |
| Tripura | The Act published on the state’s own site still shows the 1997 schedule, which is obsolete in practice |
| Jharkhand | Assessed annually, filed quarterly. Rupee figures could not be confirmed |
| Chhattisgarh | Levies, and has not abolished. Salary slab entry could not be confirmed |
| Sikkim | Levies under the 2006 Act. No figures confirmable |
| Nagaland | Monthly slabs from ₹35 to ₹208, but the published notice dates from February 2022 |
How Do You Register for Professional Tax?
Two certificates exist, and most employers need both. They are commonly known by their Maharashtra shorthand, but the statutory names are the same across states.
The registration certificate covers tax you deduct from employees. The enrolment certificate covers the tax the business itself owes as an entity or a professional.
A company with staff therefore registers twice. Miss one and the deduction side can be perfectly compliant while the entity side accrues penalties.
| State | Employer registration | Own liability | Deadline to apply | Portal |
|---|---|---|---|---|
| Maharashtra | Certificate of Registration (PTRC) | Certificate of Enrolment (PTEC) | 30 days | mahagst.gov.in |
| Karnataka | Form 1 to Form 3 | Form 2 to Form 4 | 30 days | ptax.karnataka.gov.in |
| West Bengal | Form I | Form II | 90 days | wbprofessiontax.gov.in |
| Gujarat | Form 1 to Form 2 | Form 3 to Form 4 | 60 days under the Rules | local municipal corporation |
| Telangana, Andhra Pradesh | Form I to Form IA | Form II to Form IIA | 30 days | ptax.tgct.gov.in, apct.gov.in |
| Madhya Pradesh | Registration certificate | Registration certificate | 30 days | mptax.mp.gov.in |
| Bihar | Form PT-I to PT-II | Form PT-IA to PT-IIA | 7 days of liability | Bihar Commercial Tax |
| Punjab | Registration certificate | Enrolment certificate | 30 to 60 days | psdt.punjab.gov.in |
| Tamil Nadu | Form A | Form B | after 60 days in the local body | chennaicorporation.gov.in, tnurbanepay.tn.gov.in |
| Kerala | No certificate regime | none | not applicable | professiontax.lsgkerala.gov.in |
Kerala is the outlier worth knowing about. There is no registration or enrolment certificate at all. The local body requisitions employee lists and serves demand notices directly.
Andhra Pradesh is the other one to watch. Collection reportedly moved from local bodies back to the Commercial Taxes Department from 1 April 2025, with payment online only.
What Are the Payment and Return Deadlines?
Deadlines are more flexible than slabs, and Maharashtra changed their deadlines in February 2026. This change itself is enough to make employers miss using the previous year’s pay calendar.
All references in this list refer to the obligation of the employer and not the enrolment.
| State | Payment and return deadline | Notes |
|---|---|---|
| Maharashtra | 15th of the month for monthly filers; annual return by 15 March | Changed from month-end and 31 March by a notification dated 28 Feb 2026 |
| Karnataka | Monthly statement within 20 days of month end; annual return within 60 days of year end | Quarterly option below ₹5,000 monthly |
| West Bengal | Payment within 21 days of month end; single annual return by 30 April | Quarterly returns were abolished from FY 2022-23 |
| Gujarat | Monthly return within 15 days of month end | Employers with 20 or fewer staff file annually with quarterly deposits |
| Telangana, Andhra Pradesh | Monthly, by the 10th of the following month | Return in Form V |
| Madhya Pradesh | Within 10 days of month end | Other registered persons file by 30 June |
| Bihar | Deduct in September, deposit by 15 November, statement by 30 November | Annual, not monthly. Payroll systems that spread it over 12 months are not following the Rules |
| Jharkhand | Quarterly returns on 15 May, 15 Aug, 15 Nov, 15 Feb | Assessed annually, filed quarterly |
| Tamil Nadu | 15 September and 15 February for employees | Half-yearly |
| Kerala | End of August and end of February | Remit within 10 days of collection |
| Punjab | Monthly return with proof of payment | Annual return reportedly by 13 April |
Maharashtra’s monthly or annual split is decided by prior-year liability. Below INR 1,00,000 you file annually, at or above it you file monthly, and every employer files monthly in its first year of registration.
That threshold was raised from INR 50,000 in 2019, and a lot of published content still shows the old figure.
To keep this and the rest of the statutory calendar in one place, use our payroll compliance checklist for 2026.
What Are the Penalties for Getting It Wrong?
Interest runs from the day the payment is late, and the penalty sits on top of it. Rates differ sharply between states, so the cost of the same slip is not the same everywhere.
The figures below are the employer-facing ones that come up most often.
| State | Interest on late payment | Penalty | Late registration |
|---|---|---|---|
| Maharashtra | 1.25% to 2% a month, graded | 10% of tax due | ₹5 per day |
| Karnataka | 1.5% a month | Up to 10% of tax due | No fixed penalty in the Act |
| West Bengal | 1% a month | Up to 50% of tax due | ₹500 per year of delay |
| Telangana, Andhra Pradesh | 2% a month | 25% to 50% of tax due | ₹10 to ₹20 per day |
| Madhya Pradesh | 2% a month, capped at two-thirds of tax | Late return ₹5 to ₹20 per day | ₹20 per day, max ₹2,500 |
| Bihar | 2% a month | Up to ₹100 a month for late filing | not stated |
| Jharkhand | 2% a month | Up to ₹500, then ₹5 per day | not stated |
| Punjab | 2% a month | 50% of tax due | ₹50 per day |
| Tamil Nadu | 1% a month | 100% of the shortfall on a wrong return | not stated |
| Tripura | 2% a month | Up to 200% of tax due | prescribed monthly sum |
Karnataka is worth a second look. Both its numbers moved on 1 April 2023: interest up from 1.25 % and the non-payment penalty down from 50 %. Content quoting either old figure is out of date.
For the wider penalty picture across PF, ESI and TDS, see our guide to payroll compliance penalties in India.
FAQs
These are the questions payroll teams ask most often when setting up multi-state deductions.
What is the maximum professional tax payable in a year?
INR 2,500 per person per year. The ceiling is in Article 276(2) of the Constitution, so no state can charge more. Maharashtra and Karnataka both reach exactly that figure by charging INR 200 for eleven months and INR 300 in February.
Which state’s professional tax applies to a remote employee?
Professional tax is based on the location of work and not the payroll location. In this case, the state that the individual works from is the state that applies to him/her. This is because rules vary from state to state and some states use local authorities to impose professional tax.
Do I need both a registration and an enrolment certificate?
Usually yes. The registration certificate covers tax you deduct from employees. The enrolment certificate covers the tax the business owes in its own right. A company employing staff needs both, and Kerala is the notable exception with no certificate regime at all.
Is professional tax still payable in Odisha?
Not, since 1 April 2026, when the repealing ordinance came into effect. It being an ordinance and not an Act, please check with the Law Department on the current status. The liability for previous periods will remain unaffected due to the savings clause.
Do the new Labour Codes affect professional tax?
No. The Labour Codes consolidate central labour laws, and professional tax is a state tax. The Code on Wages expressly lists statutory levies payable to a state government among the permitted deductions from wages.
Who is exempt from professional tax?
Each exemption is unique to the state. There is no federal list for exemptions. Military and disabled individuals have an exemption in most states levying personal property tax. It seems age-related exemptions are claimed widely in published material but were not verified for some states, hence it is advisable to check the notice for your state.
How Should Multi-State Employers Handle This?
The difficulty with professional tax is not the amount. It is that a company operating in six states is running six different rulebooks on six different calendars. One is annual, one is half-yearly, four are monthly, and the due dates do not line up.
Three behaviors will avoid all the trouble. Always document the effective date alongside each slab you build. Double-check each state in April when revisions will happen. You should also consider your portal check as final and not any table out there, even this one.
Where a state’s own site still serves a superseded schedule, as Karnataka’s does, the notification is what governs, not the PDF.
To map your state footprint against current slabs, registration status and deadlines, Book a Strategy Call with TankhaPay’s compliance team.
