The nomenclature ‘Professional tax’ could be one of those terms which do not completely convey the real meaning of the term. Unlike the name suggests, it is just not the tax levied only on professionals. It is a tax on all kinds of professions, trades, and employment and levied based on the income of such profession, trade and employment. It is levied on employees, a person carrying on business including freelancers, professionals, etc., subject to income exceeding the monetary threshold if any.
Professional tax is a kind of tax on income is levied by State Government that differs from State to states on rates of tax, Slab bracket for tax applicability and like that. State Government is also empowered to make laws with respect to professional tax though being a tax on income under Article 276 of the Constitution of India which deals for with tax on professions, trades, callings and employment.
There are Two types of tax which is as follows:
- Professional tax Registration certificate (PTRC)
- Professional tax Enrollment certificate (PTRC)
It may be noted that professional tax is a deductible amount for the purpose of Income-tax Act, 1961 and can be deducted from taxable income.