Profession Tax Levy On Basic Or Gross Salary

Can you tell me if the profession tax is applicable for basic or gross salary? We are considering whether profession tax on basic salary is correct or incorrect.

Furthermore, my salary structure is as follows:
- Basic
- House Rent Allowances
- Medical Allowances
- Seniority Allowances
- City Compensatory Allowances

Are the above allowances applicable for profession tax? Please explain to me according to income tax rules.

I am awaiting your reply.

Thanks,

Dear Dilip,

Professional tax is always state-specific, and the definition of salary or wages may vary from state to state. On a general basis, the definition includes pay, dearness allowance, and all other remunerations, including allowances received by any person on a regular basis, whether payable in cash or kind. It also encompasses perquisites and profits in lieu of salary as defined in Section 17 of the Income Tax Act, 1961 (No. 43 of 1961), but excludes bonus in any form and on any account, gratuity, and pension.

Based on this, all the components of the salary structure defined by you are paid to the employees on a regular basis. Therefore, professional tax shall be levied on the gross salary and not just on the Basic.

I hope your query is clear. Please revert for any clarification.

Adv. Naveen Bhardwaj
9871158855

Professional tax depends on the state and the slab of wages. The wages in PF include all salary components.

Regards,
Amit

Professional tax is levied on gross salary, not on basic salary. The new slab is as follows: PT is Rs.150 for gross salary of Rs.10,000 & above and Rs.200 for Rs.15,000 and above. The professional tax rates vary depending on the states.

Regards, Satish

Hi,

Can anyone please explain why a salary split-up is done? For example:
- Basic
- House Rent Allowance
- Medical Allowance
- DA

What is the benefit of having a salary structure?

Thanks & Regards,
cgnanij

Can I know about present profession tax? What is the difference between profession tax and income tax? What is TDS? What are the methods?

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Dear All,

Can you all help me out with this problem? Actually, I have no idea regarding TDS deduction on salary. Please tell me how it is applicable according to the slab wise or state wise, and also explain the method.

Thank you.

Hi all,

I have a query. I am working with a CA firm in Gujarat, and they pay salaries by cheques to the employees. Currently, there are no deductions from the salary for the approximately 20 employees. I would like to know the details of the following:

1. There is no salary structure like basic, HRA, DA, PF, etc. Is it important to have a structure and deduct PF? If not done, could there be any legal actions or difficulties?
2. No professional tax is being paid. Is it compulsory to pay, and if yes, how should I start?
3. Does having a proper salary structure help employees save on income tax?

Please reply. I am confused and cannot find the right direction.

Regards,
Kirty

Dear all,

Please let me know, what is the criteria for ESIC deduction and which components are included in the earning salary.

Regards,
Sandeep Kumar

Hi Kirti,

If in your company more than 20 employees are working, you people have to apply for PF & ESIC. Professional tax is compulsory to deduct from every employee, and you have to pay PT every year.

Hi Sandeep,

The ESIC criteria is INR 15,000. If an employee's salary is INR 15,000 or less, they have to pay ESIC. It has been heard that from April, the criteria will become INR 25,000. ESIC is deductible from the Gross Salary.

Dear All,

Salary breakup is necessary for an organization and employees to avail tax benefits under the Income Tax Act. The CTC is divided into the following components:

1. Gross Salary
a) Basic Salary
b) DA
c) HRA
d) Conveyance
e) Special Allowance

2. Contribution
a) PF Contribution
b) ESIC Contribution

3. Reimbursements (Examples)
a) Medical Allowance
b) Leave Travel Allowance (LTA)
c) Petrol
d) Vehicle Maintenance
e) Driver Salary

The CTC breakup will vary from company to company and is based on income tax savings for employees. Salary breakup is crucial for any organization and its employees since some statutory claims are calculated based on specific salary components rather than the total CTC amount. For example, PF is calculated on Basic Salary and Dearness Allowances, ESIC is based on Gross Salary, and PT is determined by Gross Salary.

According to income tax regulations, certain allowances are exempt from tax, such as HRA, Conveyance, Medical Allowance, LTA, and some Special Allowances (Uniform Allowance, Driver Salary, Helper Allowance, etc.).

Your faithfully,
[Your Name]

Hi all,

Professional tax should be deducted from the Gross salary. However, in our case, LTA is being added to the Gross salary, and Night Shift allowance is being deducted from the Gross salary for the purpose of PT calculation. Could you please confirm if this calculation is correct?

If only regular pay is supposed to be added to the Gross salary, then why is LTA being considered for PT calculation? Please provide clarification.

Thank you.

Hi Dilip,

The Professional Tax is a source of revenue for the state governments which helps in implementing schemes for the welfare and development of the region. Professional Tax is deducted by the employers from the salary of the salaried employees and is deposited with the state government. Other individuals pay it directly to the government or through the local bodies appointed to do so.

The respective state governments in India levy the professional tax on income from the profession or employment. Professionals earning an income from salary or other practices such as a lawyer, teacher, doctor, chartered accountant, etc., are required to pay professional tax. In the case of salaried and wage earners, the professional tax is liable to be deducted by the employer from the salary/wages and the same is to be deposited to the state government. In the case of other classes of individuals, this tax is liable to be paid by the employee himself. The tax calculation and the amount collected may vary from one state to another, but it has a maximum limit of INR 2500/- per year.

You can refer to the following link for more information on Professional Tax applicable states, not applicable states, exemption: Profession Tax Slabs India - greytHR Admin Guide - Greytip Documentation

Dear All,

Please confirm if MP PT is deducted on the Gross Rate of Salary or Gross Earned Salary.