PT: Full Form, Definition, and Calculation

What is the Full Form of PT?

The full form of PT is Professional Tax and is collected by the state governments of India.

What is Professional Tax?

It is a direct tax levied on salaries and self-employed professionals like doctors, consultants, lawyers, CAs, etc.

The amount collected as PT can vary state-wise, but the maximum amount allowed to be collected in a financial year is Rs. 2500. For employees, their companies will take the responsibility of collecting professional tax and submitting it to the government. The self-employed professionals pay PT directly from their end.

Who is Required to Pay Professional Tax?

1. Salaried Individuals

Employees whose monthly earnings exceed the state-prescribed threshold are required to pay professional tax.

2. Self-employed professionals

Self-employed individuals such as doctors, chartered accountants, consultants, lawyers, etc, who earn income directly from their practice, must pay.

3. Business Owners/Traders

Individuals engaged in business and trade, like proprietors, partners, companies, etc., with turnover above state limits must pay the professional tax.

4. Employers (Corporate Bodies)

Companies, firms, & establishments must register and pay tax both on their business and for their employees.

5. Hindu Undivided Families (HUFs)

HUFs engaging in a profession or trade, exceeding the specific turnover threshold of the state, are liable to pay professional tax.

How is Professional Tax Calculated and Deducted?

• Professional Tax is calculated based on income slabs defined by each state government.
• Employers deduct the applicable amount monthly from employees’ salaries.
• The maximum annual limit is Rs. 2,500 under Article 276 of the Indian Constitution.
• Employers must deposit collected tax with the respective state authorities on time.

What is the Maximum Professional Tax Levied in Every State?