Confused About Professional Tax and Overtime? Let's Clarify How They're Calculated

I'm an HR professional, and I'm confused regarding Professional Tax and overtime. Could you please guide me? Is overtime included in Professional Tax, and how is it calculated on overtime?

Regards,
Bhavi

Hi, Professional Tax is slab-based on Gross Salary. Hence, overtime (OT) should also be considered when determining the PT slab.

Firstly, thank you for your input.

Now, for example, if my organization is giving salary on the 7th and we are deducting the PT, and we are giving the OT on the 25th, should we deduct the PT again from the OT?

Considering Overtime for Professional Tax

Also, as you said that we should consider OT too while arriving at the PT slab, can you explain this sentence with an example?

Regards,
Bhavi

[QUOTE=consultme;2071736]
Hi,

Professional Tax is slab-based on Gross Salary. Hence, OT too should be considered while arriving at the PT Slab.

Clarification on Professional Tax and Overtime

Firstly, thank you for your input. Now, for example, if my organization is giving salary on the 7th and we are deducting the PT, and we are giving the OT on the 25th, should we deduct the PT again from OT?

Also, as you said that we should consider OT too while arriving at the PT Slab, can you explain this sentence with an example?

Is there any act which gives details about my question?

Regards,
Bhavi

Let us assume that a salary is paid in two intervals every month, say on the 7th and the 22nd of each month. Do you mean to say that we have to pay the Professional Tax (PT) only on the salary of the 7th and not on the 22nd?

Clarification on Professional Tax Payment

The Professional Tax is paid on the gross salary earned for a particular month, regardless of whether overtime (OT) is paid on a later date or on the same date. Hope this clarifies your query.

Do you maintain a wage register under the S&E Act, the Contract Labour Act, or any other applicable act? If not, please ensure you maintain one for legal compliance. Failure to do so may result in the need to pay Professional Tax.

Regards,
Avish

OT is a part of earnings, and PT is payable on gross earnings during the calendar month. When you make payments to employees more than once a month, all such payments should be combined to ascertain the PT monthly liability on the total gross earnings for that month. You are making payments twice a month, so you need to adopt a system where PT is deducted from the total gross earnings during the month.

I suggest that you add the amount of OT paid in the previous month to the current month's gross for the purpose of PT deduction. This, I feel, is an easy way. Alternatively, you have to ensure the deduction of the difference in PT due to OT payment from the payment of OT. Hope you understand what I said.

Regards.

May I know how you are calculating and paying ESIC? Is ESIC also applicable on overtime?

Regards,
Vikram Trivedi