What is professional tax
Professional tax is a tax levied by some state governments on income earned through employment, profession, trade or business. Despite the name, it applies to salaried employees too, not just professionals. Because it is a state subject, the rules and amounts vary by state, and some states do not levy it at all.
Who pays it
Salaried employees, professionals such as doctors and lawyers, and people running trades or businesses may be liable, depending on the state. For employees, the employer usually deducts it from salary and deposits it with the state.
Employer responsibilities
If you employ people in a state that levies professional tax, you generally need to register, deduct the tax from employees' salaries, deposit it, and file returns. Getting this right is part of payroll compliance.
- Register for professional tax where applicable
- Deduct the correct amount from salaries
- Deposit it with the state authority on time
- File the required returns
On your salary slip
For employees, professional tax is the small statutory deduction you may see on your payslip. The amount is usually modest and is set by the state, often with a cap on the annual amount.
Multi-state businesses, take note
If you operate across states, professional tax rules differ in each, which adds complexity to payroll. Tracking the requirements state by state avoids inadvertent non-compliance.
How Aidwish helps
Aidwish handles professional tax registration, deduction, deposit and returns as part of your payroll compliance — across one or multiple states — so it is one less thing to track.
Note: GST, tax and compliance rules change frequently through government notifications. Always verify the current rules or consult a professional before acting. Aidwish can help you stay updated and compliant.