Professional Tax Registration

Professional tax is a direct tax imposed on individuals earning an income through professions, employment, trades, or callings. Unlike the income tax, which is imposed by the Central Government, professional tax is levied by the state or union territory governments in India. For salaried and wage earners, employers are responsible for deducting the professional tax from their salary or wages and depositing it with the state government. For other individuals, the tax must be paid by the individuals themselves. The tax rate and the amount collected can vary between states.

Rate of Professional Tax

  • This tax is typically based on a slab system according to the professional's gross income and is deducted from their income monthly.
    The Commercial Taxes Department of each state or union territory is responsible for collecting professional tax, using predetermined tax slabs that differ across regions.
    The tax is calculated based on the individual's annual taxable income but can be paid either annually or monthly. As per Section 16 (iii) of the Income Tax Act 1961, the professional tax paid by an employee is deductible from their gross salary income.

Exemption from Professional tax payment

Certain individuals are exempt from paying Professional Tax under the Professional Tax Rules. The exemptions include:

  • Parents of children with permanent physical or mental disabilities.
  • Members of the armed forces as defined by the Army Act of 1950, the Air Force Act of 1950, and the Navy Act of 1957, including those in auxiliary forces or reservists on active duty.
  • Badli workers in the textile industry
  • Persons with permanent physical disabilities, including those who are blind.
  • Parents or guardians of individuals with mental disabilities
  • Individuals above 65 years of age.

Benefits of Professional tax registration in India

The benefits of Professional Tax Registration in India include:

  • Compliance with Professional Tax regulations is straightforward, resulting in a smooth registration process with minimal restrictions.
  • Paying Professional Tax is mandatory by law, and timely payment helps avoid penalties and punitive actions against employers or self-employed individuals.
  • Professional Tax serves as a revenue source for state governments, aiding in the implementation of various welfare and development schemes in the region.
  • Employers or self-employed individuals can claim a deduction on the professional tax previously paid.


As an employer, the company is responsible for obtaining a Professional Tax Registration Certificate (PTRC) and collecting a monthly tax of Rs 200 from the director if their salary meets the prescribed schedule.

Professional tax with Professional Tax Registration in India is a state-level tax imposed on income earned through a profession, trade, calling, or employment. The tax is based on income slabs and applies to individuals who are either self-employed or employed by an entity.

PTEC Registration in India is required for the company itself, its directors, partners in LLPs or partnership firms, proprietors, and professionals associated with the business.

Professional tax registration in India demonstrates to employers, peers, and the public that you have dedicated years to developing your skills, confidence, knowledge, and understanding in your field, and have clearly proven your competence and commitment to professional development.

It serves as a government revenue stream, with a maximum annual payment of INR 2,500, determined by the taxpayer's salary through predetermined slabs. Additionally, it applies to employees of private companies.

Professional tax is typically paid at the end of each month, under the assumption that professional activities were conducted during that period.

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