Professional tax: a small state tax with two registrations and real penalties

Article 276 of the Constitution lets states tax professions, trades, callings and employments, and caps the tax at ₹2,500 per person per year. Each state that uses the power has its own Act, slabs, forms and due dates. Employers deduct it from salaries and pay it over; self-employed persons, companies, firms and directors pay it on their own account.

Professional tax paid is deductible from salary income under section 16(iii) of the Income-tax Act in the old regime, and is an allowable business expense for the self-employed.

Levy professional tax: Maharashtra, Karnataka, West Bengal, Tamil Nadu, Gujarat, Andhra Pradesh, Telangana, Kerala, Madhya Pradesh, Odisha, Assam, Bihar, Jharkhand, Punjab, Chhattisgarh, Meghalaya, Tripura, Sikkim, Mizoram, Manipur, Nagaland and Puducherry.

Do not: Delhi, Uttar Pradesh, Haryana, Rajasthan, Uttarakhand, Himachal Pradesh, Jammu and Kashmir, Goa, Chandigarh and the other union territories.

The tax follows the place of work. A Delhi company with employees in Bengaluru and Mumbai registers and pays in Karnataka and Maharashtra for those employees, and nothing in Delhi.

States revise slabs by notification; Karnataka moved to the two-band structure above from April 2025. Confirm the current notification for your state before configuring payroll.

• Enrolment certificate (PTEC) for the entity’s own liability: every company, LLP, firm, and self-employed professional or trader, and in Maharashtra each director, pays a fixed annual amount, usually ₹2,500.
• Registration certificate (PTRC) for an employer who has at least one employee whose salary crosses the state’s threshold, to deduct and remit the employees’ tax.

Both are taken from the state’s commercial tax or professional tax department within 30 days of becoming liable: of starting business for PTEC, of employing the first liable employee for PTRC. Companies incorporated in Maharashtra, Karnataka and West Bengal are registered for professional tax through the incorporation form itself. Each branch in a different state needs its own registration.

Due dates differ by state. In Maharashtra, employers whose annual liability is ₹1 lakh or more pay and file monthly by the end of the month, and others file one annual return by 31 March; the PTEC amount is due by 30 June. In Karnataka the monthly payment and return are due by the 20th and an annual return by 30 May. In West Bengal payment is monthly by the 21st with an annual return. Tamil Nadu collects half-yearly through the local body.

Late registration, late payment and late returns each carry their own penalty, and they add up faster than the tax. In Maharashtra: ₹5 a day for late PTRC registration, interest at 1.25 percent a month on tax for late PTEC enrolment and on late payment, a penalty of 10 percent of the tax, and a late return fee of ₹200 within 30 days or ₹1,000 after that. Other states follow the same pattern with different amounts. Because the liability accrues from the first liable employee, a company that discovers the omission after three years pays the tax for all three years from its own pocket; it cannot recover past deductions from employees who have left.

Our professional tax service takes the PTEC and PTRC in every state where you have staff, from ₹999, and sets the payroll slabs.